S.A. Advisory E-Mail Update
October 21, 2001
New BUY & SELL recommendation for S. A. Advisory for October 21, 2001 Dear E-mailer's http://www.saadvisory.com We have not been paid by any of the list investments within this message! We may buy, sell, and or hold any listed investments @ our own discretion. If you do not want our material any longer, please visit our website and follow the directions http://www.saadvisory.com/update We have been very interested in the oil and gas exploration and development in western Canada! We initially recommended Allied Oil and Gas (aog.to -trades on the Toronto exchange) @ .66 US or .98 CD on or about 7/26/00! A few days ago a buyout bid was offered to Allied shareholders @ $2.65 CD or $1.75 US...THIS RESULTS IN A 170% SHORT TERM GAIN! WE WILL NOT WAIT FOR THE ACTUAL TRANSACTION TO TAKE PLACE, BUT INSTEAD WILL SELL OUR SHARES ON THE OPEN MARKET! NEW BUY RECOMMENDATION---KHL.V (VANCOUVER) KICKING HORSE RESOURCES, INC.-------KHL--FULLY REPORTING WITH SEDAR OIL AND GAS EXPLORATION IN WESTERN CANADA CURRENT PRICE- .44 US---.70CD---RECOMMENDED VIA OUR PHONE SERVICE ON OCTOBER 19, 2001..( OUR PHONE SERVICE IS PERSONAL! WE CALL YOU VIA THE TELEPHONE BEFORE OUR RECOMMENDATION IS RELEASE VIA E-MAIL AND EVENTUALLY VIA SNAIL-MAIL( ANTHRAX FREE)! IN OUR OPINION KHL (TRADES ON THE VANCOUVER AND IS FULLY REPORTING) HAS HUGE UPSIDE POTENTIAL SHORT, MEDIUM AND LONG TERM! MOST JUNIOR OIL AND GAS COMPANY HAVE HAD RECORD REV AND EARNINGS DURING THE PAST 12 MONTHS DUE TO HIGHER OIL AND GAS PRICES- KHL IS NO EXCEPTION! THE MOST COMPELLING ASPECT OF KHL IS THE PENDING PURCHASE OF A "GEM" PROPERTY THAT IS CURRENTLY IN RECEIVERSHIP..THE CLOSING DATE ACCORDING TO A RECENT PRESS RELEASE WAS OCT 31,01.. IN A CONVERSATION WITH MANAGEMENT ON 10/19/01 IT WAS LEARNED THAT THE CLOSING WILL BE DELAYED BY 2 WEEKS. KHL BEFORE THE ACQUISITION OF THE LEDUC OIL AND GAS PROPERTIES FROM THE PROBE EXPLORATION, INC. RECEIVERSHIP. KHL FACTS: REV FOR SIX MONTHS ENDED JUNE 30, 2001 $10.7 MILLION CD NET INCOME/SHARE FOR SIX MONTHS .10 CD FULLY DILUTED CASH FLOW/SH FOR THE SIX MONTHS .16 CD FULLY DILUTED FULLY DILUTED SHARES OUTSTANDING- 38.2 MILLION NET ASSET VALUE/SHARE -------------- .92 TOTAL PRODUCTION (BOE/D 6:1)---------1,177 ON 08/23/01 KHL ANNOUNCED COURT APPROVAL TO ACQUIRE OIL AND GAS ASSETS IN THE LEDUC ARE OF ALBERTA FROM PRICEWATERHOUSE COOPERS INC. THE COMPANY INTENDS TO FINANCE THE ACQUISITION FROM EXISTING CASH RESERVES, BANK DEBT AND THE RE-SALE OF APPROXIMATELY 30% OF THE PURCHASED OIL AND GAS ASSETS. THE GROSS PURCHASE PRICE OF THE LEDUC ASSETS CURRENTLY IS AROUND $63 MILLION CD( THIS NUMBER MAY CHANGE ACCORDING TO PRICE OF OIL AND GAS AT THE TIME OF CLOSING). KHL.V HAS PAID $6.5 MILLION IN CASH (CD), 30% WILL BE PAID FOR BY EXALL RESOURCES LIMITED( TORONTO STOCK EXCHANGE LISTED) AND THE BALANCE WITH BANK DEBT. WE ASSUME THAT USING CURRENT INFORMATION- THE BANK BORROWING WILL RESULT IN $40 MILLION CD ( 30% OF TOTAL SALE PRICE WILL BE FUNDED BY EXALL). AT THE CLOSE OF THIS ACQUISITION KHL.V WILL SUDDENLY WILL GROW BY 3000 BOE/D, WHICH WILL RESULT IN A TOTAL PRODUCTION OF OVER 4200 BOE/D (BASED UPON 6:1) IT IS ESTIMATED THAT THE ACQUISITION ( MANAGEMENT DISCUSSIONS ON 10/19/01) WILL DRAMATICALLY ENHANCE CASH FLOW/SHARE AND EARNINGS/SHARE FOR 01 AND 02 ( THE ACQUISITION WILL BE DATED FROM 01/01/01) EVEN THOUGH WE HAVE SEEN DRAMATICALLY LOWER OIL AND GAS PRICES DUE A RECESSIONARY ENVIRONMENT, WARMER TEMPS AND GREATER PRODUCTION CASH FLOW AND EARNINGS FOR 01 WILL BE SIZABLE! CONSERVATIVELY OUR CASH FLOW FOR 01 ( INCLUDING THE PENDING ACQUISITION AND MINUS OUT THE THE INTEREST ON THE $40 MILLION CD OF POTENTIAL DEBT) WILL BE AROUND .85CD, WHICH WILL RESULT IN AROUND.35 CD EARNING/SH ( 40 MILLION SHARES). AT PRESENT KICKING HORSE RESOURCES, INC. TRADES @ .70 CD WE ARE LOOKING @ A STOCK THAT IS TRADING @ 2X EST. PE FOR 01 ENDING DEC 01! AT PRESENT MOST JUNIOR OIL'S ARE TRADING @ 6 TO 7x PE ..IF WE ASSIGN A 7 PE FOR KHL.V AND USE THE EST. EARNINGS OF .35--THE RESULT IS $2.45 CD! THIS IS OVER 200% ABOVE THE CURRENT PRICE!! ONCE THIS ACQUISITION IS COMPLETED INSTITUTIONS AND BROKERAGE FIRM WILL BECOME VERY EXCITED ABOUT THIS SITUATION! THEY WILL NOT BUY THIS ISSUE UNTIL THE DEAL IS DONE! WE OF COURSE HAVE "BIGGER" BALLS AND WILL TAKE THE CALCULATED RISK BEFORE THE FINAL SIGNING!! PLEASE REMEMBER THAT THESE NUMBERS ARE BASED UPON 01 ESTIMATES-FOR 02 GREATER PRODUCTION LEVELS ARE ANTICIPATED AND COST SAVINGS PROGRAMS WILL OF COURSE BE PUT IN PLACE .. MANAGEMENT IS EXTREMELY EXPERIENCED,OIL AND GAS STOCKS ARE CURRENTLY OUT OF FAVOR, NEAR TERM UPSIDE IS 200% AND LONG TERM UPSIDE COULD BE 10X THE CURRENT LEVELS OR A TAKEOVER OR BUYOUT IS ALWAYS POSSIBLE!! WE RATE KICKING HORSE RESOURCES, LTD WITH A STRONG BUY RECOMMENDATION FOR RISK TOLERANT ACCOUNTS. WE INTEND TO MONITOR KHL.V IN OUR PORTFOLIO FOR % GAIN PERFORMANCE. PS: as more info becomes available we will inform website: http://www.kickinghorseresources.com corporate number--403-264-4073 S.A. Advisory super fast phone service information and prices call 801-272-4761 we currently hold a position in khl.v that we purchased on 10/19/01 for .44/sh US
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