Alpine Buttercup

Penn West Energy: More Questions Than Answers

Hi there,

Steve Ward, thanks for your kind response. I'll keep looking through all this info. I just have another question... as I'm still getting used to all these metrics. I just can't see how buying land is a bad idea. And leumas, you mentioned "without huge sacrifice in terms of per share boe production or reserves". Leumas, you also found the information from CIDA... Does anyone know if they have already counted oil sands proved and probable? (Sorry if my language is not very sophisticated) Alberta has had traditional seismic over every meter of it... and most places have been looked at two or three times. I don't think traditional seismic picks up oil sands reserves though. I think it focuses on pools. It was only last year or so... when the US started recognizing oil sands reserves in the accounting. If they bought (are buying) all that land and are planning to do gravity, radiometric and magnetic arial surveys so they can officially recognize oilsands reserves... have they already included that... and I just can't see it yet? In reading all these annual reports and websites I still don't understand things well enough. That would make sense with no premiums on the last acquitions... and not paying high prices for oil reserves that haven't even been recorded yet, but they know are there.... They have a 100 years of oil drilling data and low success rates in the beginning years because the will didn't frac right or was full of sand.

Penn West Energy: More Questions Than Answers

Thanks for a great website and great comments! This is my first time writing, but I've been listening for awhile. I've just finished my first Financial Accounting course at university, and I've been listening and reading about income trusts for awhile. I have a few questons...

1. AET.un talks about all the DRIPs and how that allows them to have distrubutions that don't affect cash flow and they can have higher payout ratios with comfortable cash flows. Management in Calgary is a small club of old boys... and they just all know how this works and don't offer much to the public in the way of information. It's true. I think this might be what their new "free flows" are referring to... any thoughts?

2. It's break-up up north and there can't be a lot of drilling or develpment until summer or freeze up again next winter... As far as reserve replacement goes, everyone is criticizing them for buying all this land. Are they using the land rights as a way to store cash? The tax rules for income trusts have them distributing all the profits, so they could store cash in land and then they can sell it to Exxon or Imperial or Petro-Canada when they need to prop up cash? Sell it off saying that they are divesting non-core assets or something? If oil stays high, then they eventually drill it? I've been watching PD.un... It seems like everyone is getting ready to move, but not yet. The oil patch seems to be reorgaizing it self. They have to figure out how to change from trusts into something else. Everyone on BNN talks about the tax pools that have been built up, but Encana has also just announced a split of the oil and gas. It seems that reorganization is going on. The environmental regulations are pushing for more carbon capture... and gas flaring regulations. To stop the gas flaring they need more pipelines closer to these swan hills, pembina, and seal fields. The roads are far too muddy to get a truck in most of the time. To get at the Peace River oilsands, they need to wait for the nuclear energy plants in Peace River to be built. I don't think regulators will allow another Ft. McMurray oilsands development. It will have to be insitu with steam. That takes infrastructure. Which alberta doesn't have and doesn't have the labor to build. How to sit on cash? Buy land and rights? Good payouts while waiting for these things to sort themselves out. How can you see whether this is in the numbers? True or not true?