S.A. Advisory E-Mail Update
September 20, 2000
New Buy Recommendation on OIL & GAS company --AOG.V--This looks like a screamer!!-Sept 20th,00
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We have not been paid for this recommendation (aog.v)! We currently own 40k shares
of this Oil and Gas company in our personal portfolio and the purchase price was
@ current levels. We may also trade our position at our own discretion.
NEW BUY RECOMMENDATION
Allied Oil and Gas---Vancouver-AOG.V --current price $.66 or CD$.99
Oil and Gas exploration company with production located within Southern & Central
Alberta and Western & Southwestern Saskatchewan.
22 million shares fully diluted issued and outstanding.
Current production 1700 boepd ( barrels of oil equivalent/day)
35% gas and 65% oil
Around 10% hedged
At present all values are based upon $28.00 WTI (West Texas Intermediate) & CD$4.00
(Henry Hub Natural Gas)
Recently acquired all shares of Backer Oil and Gas--resulting in production increase
from 900 boepd to over 1700 boepd
Current reserves-5.3 million boe
Management estimates that the nav of the company to be CD$1.50. NOTE: This value does
not take into account the current Oil and Gas prices, that is, US$36.00 WTI and CD$7.75
HH natural gas.
select financial data--six months ending June 30th 00
(all values in CD$)
2000 1999
rev $5.6 million $912k
net income $900k $115k
Year End Estimates ending Dec 31
2000 2001
rev $20 million $29.7 million
cash flow $10.4 million $16.1 million
cash flow/sh .50 .77
earnings $4.million $6.3 million
earnings/sh .19 .30
overview actual production for first production of 2000 boe/d
half ( 1700)-exit rate for US$28. WTI & CD$4.25 gas
00-2000 boe/d-values are based exchange CD$1.00=US$.67
upon US$28 WTI and CD$4.25 gas-
exchange rate CD$1.00=US$.67
Note: Earnings/share have not been converted to US$ and values are before taxes.
Earnings US$ for 2000 is equal to US$.13---Please keep in mind that these estimates
are based upon much lower Oil and Gas prices!!!It is very likely that all values will
be dramatically HIGHER!!!! The estimates have been formulated from management discussions.
Management is very conservative and extremely experienced!!WE ALSO ANTICIPATE THAT AOG.V
WILL BE LISTED ON THE TORONTO EXCHANGE WITHIN A FEW WEEKS--THIS WILL YIELD GREATER EXPOSURE.
OVERVIEW:
This looks like a winner!!!WE have huge rev and earnings growth, skyrocketing oil and gas
prices, very low pe and cf value ( much lower than standard valuations),growing reserves,
qualified management,acquisition oriented, unknown & under-followed, only 10% of production
is hegded, listing on major exchange in Canada pending & extremely positive exchange rate
( CD$1.00=US$.67).
WE RATE AOG.V WITH A VERY STRONG BUY RECOMMENDATION @ CURRENT LEVELS! Finally, if we
apply a conservative PE of 15x and assume conservatively that AOG.V will earn at least
US$.11 ( after taxes) --we get US$1.65---A FAR CRY FROM THE CURRENT LEVEL OF US$.66.
WHEN THE HERD SMELLS THIS OPP. LOOK OUT FOR THE GUSHER!!
OUR PHONE SERVICE WAS INFORMED ABOUT AOG.V ON SEPT 13,00 @ AROUND US$.60
FOR INFORMATION ABOUT OUR PHONE SERVICE CALL 801-272-4761
REG PHONE SERVICE $550--ADVANCED PHONE SERVICE $1100.00
Yours truly, William Velmer