September 28, 2001

Advantage Energy Income Fund formerly Search Energy Corp. (AVN.UN on TSE), Calgary, AB, tel: (403) 261-8810. Price: Sept 28/01: $7.69, 52-week range equivalent: $12.55-7.60.  First mentioned in this newsletter at the equivalent $10.40 on April 3/01, and last commented at  $11.28 on June 22/01.  On August 30, the fund reported results for the first 38 days of its operations as an oil & gas income fund, period ending June 30.  Revenues of $7.4 million came from $3.4 million oil & NGL (42%) and $4.3 million natural gas (58%) and threw off $4.4 million in cash flow, 34 cents/ f.d. unit.  Production consisted of an average 1,364 bbls/d of light crude & NGL, 1,336 bbls/d of heavy oil and 21.7 mmcf/d natural gas.  This translates into 6,316 boe/d.  In late July, Advantage acquired a private oil & gas company producing 1,650 boe/d consisting of 750 bbls/d of light crude & NGL and 5.4 mmcf/d of natural gas.  This increases the fund’s reserve life by 14% to 8.1 years and increases the reserve base by 43% which now consists of 52% natural gas, 32% light oil and 16% heavy oil.  In retrospect at present evaluations, the purchase price of $57.8 million appears steep, based on $8.17 per established boe and $35,200 per boe/d production.  In order to finance this, the fund is currently closing a $37.5 million float of 5 million units at $7.50/unit.  A further $5.6 million can be raised through a 30-day option of an additional 750,000 unit at the same price.  The fund has been encountering success in drilling at Vermilion, Alberta in multizone natural gas wells.  This could add 1,167 boe/d to the current production level of 8,000 boe/d.  Once the current financing is completed, the fund should have anywhere between 17.8 million and 18.6 million units outstanding.  After having paid out distributions of 28 cents/unit in July and August, Advantage has set the monthly payments for September and October at 22 cents/unit as a result of lower natural gas prices.  At this current payout rate, Advantage units yield 34%.  However, it would appear unlikely that the payout continues at this high level unless natural gas and oil prices were to reverse present trends.

Agnico Eagle Mines Ltd. (AGE on TSE, AEM on NYSE) Toronto, ON, tel: (416) 947-1212, Price Sept 28/01:C$16.50, 52-week range:$18.50-7.30. Last commented at C$9.78 on April 3,2001.  The company has successfully increased its production rate to over 5,000 tons/day from 3,880 tpd and now plans to increase this to 7,000 by 2003 through a further $85 million in capital expenditures.  However, two problems arise.  One, about 35% of Agnico’s revenue stream comes from the zinc, copper and silver by-products and base metals prices are showing weakness. The other, to get to the additional 4-5 million ounces of gold at depth (beyond the existing 3.3 million ounces) will most likely involve sinking at least one other shaft.  The shares currently trade at 55 times anticipated cash flow of 30 cents/sh for this year and at 27.5 times projected cash flow of 60 cent/sh for 2002.  As such, the stock appears to be fully priced.

Alimentation Couche-Tard Inc. (ATD.B on TSE), Laval, QC, tel: (450) 662-3272     Price: Sept 28/01: $17.50, 52-week range: $19.65-8.75.  This is the first mention of the company in this newsletter.  The company is the leader in the Canadian convenience-store industry and the 9th largest convenience retailer in North America with sales approaching C$2.4 billion.  It operates a network of 1901 stores in 4 markets, eastern, central and western Canada and in the Midwestern US.  720 stores include gasoline retailing.  All told, ACT employs 13,100 people.  Banner stores in Canada are Couche-Tard, Mac’s, Mike’s Mart and Becker’s.  The company operates 225 Bigfoot stores in Indiana, Illinois and Kentucky.  For the 12 weeks ended July 22, 2001, sales increased 27% to $516 million.  This included the 225 Bigfoot stores for the last 31 days of the period.  Same store sales in Canada increased 10.2%.  Net earnings were $14 million, or 37 cents/fully diluted share, an increase of 66% over the $8.4 million, or 22 cents/fds of last year.  The acquisition of Johnson Oil Co., the Bigfoot operator, cost C$116 million and was financed through a long-term loan.  As of July 22, the company’s long-term debt stood at $243.5 million compared with shareholder’s equity of $242.8 million.  During the period under review, $10.2 million of the $19.4 million in cash flow was used to pay down long-term debt.  To date, the Bigfoot acquisition is working out well and the company has finished installing the optical scanning system throughout this newly acquired network.  Management is currently talking to two smaller chains and has identified 6 other regions in which acquisitions and expansion could take place in what remains a fragmented market.  The company is currently converting the 56 stores acquired from Irving Oil in eastern Canada, expanding the 31 Mac’s franchised stores acquired from R-Con Centres in Manitoba as well as adding 50 additional stores in Canada.  Management projects sales of $2.4 billion for the year ending April 30, 2002, excluding new acquisitions, and earnings of $42 million, or $1.10/sh on the 38 million shares outstanding.  With a thrust into the US, the company aims for 20% growth a year in revenues and earnings over the next 5 years.  That being the case, the shares could very well trade at a 20 times multiple to earnings.

Bonavista Petroleum Ltd. (BNP on TSE), Calgary AB, tel: (403) 213-4300, Price: Sept.28/01:$23.25, 52-week range: $34.75-21.75.  This is the first mention of the company in this newsletter.  Bonavista is an independent oil and gas exploration, development and production company operating primarily in 4 core regions in the western Canadian sedimentary basin.  By being the operator in 96% of its production venues, management has exhibited consistent success and growth over the last 3 and a half years. This has produced 14 quarters of continuous profitable growth.  For example, oil production during the 2nd Q ended June 30 of 7,953 bbls/d increased by 146% over that of the 1st Q, gas by 4% and combined production of 29,373 boe/d showed an increase of 23% QoQ.  During this period, the company’s portion of oil & NGL produced increased to 21% of total production compared with only 8% a year ago.  The company is currently producing at 32,000 boe/d and expects to exit the year at a production rate of 35,000 boe/d.  Through a combination of internally-generated development and 13 complementary acquisitions within existing core regions, Bonavista added 26.5 million barrels of oil-equivalent reserves in the first 6 months of this year, a 47% increase from year-end reserves.  This replaces annual production by 2.4 times.  Based on expenditures of $175 million, this equates to finding costs of $6.60/bbl.  During this period, the company increased its inventory of undeveloped acreage from 643,000 to 789,000 acres.  Bonavista has had its bank borrowing capacity increased to $220 million and is currently sticking to its capital expenditure budget of $235 million.  Cash flow for the year should come to about $215 million, or $7/fds.  Because of a proven growth record, BNP shares could trade at a premium multiple of 4.5 times cash flow, indicating a share price level of $31.

Canadian Pacific Limited  (CP on TSE and NYSE), Calgary AB, tel: (403) 218-8000. Price: Sept 28/01: $48.34, 52-week range:$66.95-38.25.  Last mentioned at $56.75 on August 31/01.  The CP group of stocks has been hard hit since the terrible day of September 11.  On September 26, CP shareholders approved by 98% splitting up into 5 publicly traded companies.  Although trading has begun on a “when issued” basis, shareholders of record October 5 will be receiving stock certificates of each of the 5 companies and trading of the regular shares are expected to commence trading on both the TSE and NYSE on October 3/01.  CP shares will cease to trade after the close of business on October 2, 2001

For each share of CP, the holder will receive:

- 0.684 shares of PanCanadian Energy Corporation, symbol PCE on TSE, PCX on NYSE

- 0.166 shares of Fording Inc., symbol FDG on TSE and NYSE

- 0.50 shares of Canadian Pacific Railway Limited, symbol CPZ on TSE, CP on NYSE

- 0.25 shares of CP Ships Limited, symbol TEU on TSE and NYSE

- 0.25 shares of Fairmont Hotels & Resorts Inc., symbol FHR on TSE and NYSE

Canadian Pacific Limited’s subsidiaries have obtained all financing commitments necessary for the proposed reorganization of its five main businesses, in particular CP Ships.

Each of the companies are world class entities and it is this newsletter’s opinion that investment portfolios will attempt to build up representative dollar holdings in most of these five. Brief descriptions of each of the 5 companies were included in the DDIN newsletter of August 31, 2001.  Following are some additional comments.

Canadian Pacific Railway (CPZ on TSE, CP on NYSE) Calgary AB, tel: (403) 319-3591. Price: Sept 28/01: $22.60, 52-week range: $34-20.  Last mentioned on August 31/01 at $29.85.  CPR stock has been affected by the turmoil caused by the events of September 11 and by the effect that may be caused by the rail transportation of goods, particularly in relation to the real possibility of a downturn in the economy. On Sept.25, CPR and Norfolk Southern Corporation announced that they will launch joint intermodal service between the Port of New York/New Jersey and Eastern Canada that slices one-third off the standard rail transit time.  The service begins Oct.1.  While this may create competition with truck transportation, it may also assist shippers by carrying containers and thus avoiding delays at border crossings.  Earlier projections of earnings of  $2.55/sh this year, unchanged from that of last year, may very well have to be revised downwards. Projections for 2002 place earnings of $2.85/sh.  Comparisons with other railways suggest a possible one-year share price target of $35.  There will be 158.2 million shares out.

CP Ships Limited (TEU on TSE & NYSE) London UK, tel: 44-20-7389-1100, Price: Sept 28/01:$10.85, 52-week range:$17.85-9.41.  Last mentioned at $17.35 on August 31/01.  The stock has been particularly hard hit since the September 11 terrorist attack causing concerns to the state of world economy.  Of the combined fleet of 80 ships, eight were operated under long term charters that required prior consent of lenders & related parties for CP Ships to participate in Canadian Pacific’s reorganization.  All such consents have been obtained.  In addition CP Ships has obtained commitments from institutional investors for a $255 million private placement that provides long-term financing for new container ships on order in its major capital expansion program.  The company believes that this along with its US$175 million revolving credit line combined with its cash flow will be sufficient to meet its known financial commitments.  In the near term, CP Ships will lack in performance since the company is so closely tied to international economic conditions.  The company is among the top 10 container shipping companies in the world.  Because of fleet expansion there is currently downward pressure being put on freight rates.  Earnings for this year were expected to be about $2/sh, down from $2.61 in 2000, but will now most likely be revised downwards.  Next year could see a further drop to possibly a level of $1.70/sh, based on 79.1 million shs out.  That being the case, the stock may very well have a top limit price rage of $17 over the next 12 month period.

Fairmont Hotels & Resorts Inc. (FHR on TSE and NYSE), Toronto ON, Tel: 1-866-627-0642, price: Sept 28/01: $23.40, 52-week range:$40.00-20.49.  Last mentioned in this newsletter at $35.35 on August 31/01.  The stock, since the tragic events of September 11, has been hard hit due to the ramifications for world travel restraints.  Fairmont announced on September 26 a normal course issue bid to purchase up to 10% of its 79 million shares outstanding over the next 12-month period.  Fairmont currently has 77 luxury and first class hotels in its portfolio, representing more than 30,000 rooms. These are more fully discussed in the DDIN edition of August 31, 2001. Earnings projections of $1.10/sh this year, up from $1.07 in 2000 and for $1.50 next year will now have to be revised downward. 

Fording Inc. (FDG on TSE and NYSE), Calgary AB, tel: (403) 260-9800, price: Sept 28/01:$20.80, 52-week range: $27.25-20.75. Last mentioned in this newsletter at $24.60 on Aug.31/01.  The company is a major producer of metallurgical coal and is planning on producing thermal coal for power plants.  On Sept.24, Fording announced that it has filed documents to proceed to public consultation and permitting stages on the Brooks power project in southern Alberta.  This would involve building two 500-megawatt generating units making use of its low-sulphur coal reserves.  Once in operation in late 2005, it should provide Albertans with a reliable supply of electricity for 35 years. The company is still evaluating the possibility of constructing another, the Fording River Power Project, a 150 MW coal fired power plant using tailings from its existing Fording River metallurgical coal mine.  At present, Fording is the largest producer of coal for export in Canada, producing mainly metallurgical coal from 3 mines in British Columbia.  It is the 2nd largest producer of metallurgical coal for export in the world.  In addition, it operates 2 thermal coal mines in Alberta and has major undeveloped thermal reserves in that province.  Fording is also the world’s largest producer of the industrial minerals wollastonite and tripoli from operations in the US and Mexico.  The company announced that it intends to conduct a normal course issuer bid to purchase up to 5.2 million shares, representing 10% of the 52.5 million shares outstanding over the next 12 months. Earnings are projected at $1.75 this year and $1.95 for 2002.  In comparison to similar companies (Peabody, Arch, Consul, Massey Energy), the stock could trade at a $30 level over a 1 year time period.  Fording expects to pay a quarterly dividend of 12.5 cents, thus providing the stock with a yield of 2.0%. 

PanCanadian Energy Corporation (PCE on TSE, PCX on NYSE), Calgary AB, tel: (403) 290-2020, price: Sept 28/01: $36.75, 52-week range: $46.00-35.01.  Last mentioned in this newsletter at $36.50 on August 31/01.  Shareholders approved on September 25 the reorganization of PanCanadian Petroleum Ltd. (PCP) into PanCanadian Energy Corporation (PCX).  Prior to this, PCP paid out to its shareholders a special dividend of $4.60/sh on Sep 13/01.  The company has started to sell electricity generated from its natural gas powered 85 megawatts Cavalier Power Station, 35 miles east of Calgary, to the Alberta Power Pool.  The plant is capable of supplying electricity to 85,000 homes and is geared to expand for an additional 20 megawatts. On Sept 25, the company announced that it had filed a shelf prospectus to raise up to $1 billion of medium-term notes from time to time until October 2003.  This may imply that the company may embark on an acquisition program. PanCanadian is among Canada’s largest oil & gas producers.  It also has major oil production in the UK North Sea and in the US Gulf region.  Oil & NGL production currently production at 115,000 bbls/d and natural gas production (which accounts for 60% of production) runs at 1.1 billion cf/d.  The stock is currently trading at a modest 3.5 times anticipated cash flow of $10.40/sh for 2001, or 6.7 times projected earnings of $5.50/sh.  In addition the stock pays a 10 cents quarterly dividend, to yield 1.1%.  A 1-year share price target of $42 appears reasonable, based on its recent 10% YoY rate of growth and the dynamic nature of its exploration program. There are 254 million shares outstanding.

Christopher & Banks Corporation (CHBS on NASDAQ), Plymouth, MN, Tel: (763) 551-5000. Price: Sept 28/01: $28.00, 52-week range: $47.50 –15.25.   First covered in this newsletter on April 8/00 at $10.93 adjusted for two 3 for 2 splits and last mentioned on June 22/01 when trading at $33.15.  On September 25, the company reported 2nd Q earnings for the period ending September 1 of $5.3 million, or 31 cents/sh, a 27% increase over last year’s $4.2 million, or 25 cents a share.  Sales increased 39% to $57.8 million.  Same store sales increased 8%.  This brought 6-month earnings to $11.9 million, or 69 cents/sh, a 31% increase from last year’s $9.1 million, or 54 cents.  Net sales increased 38% to $115.4 million and same store sales for the period increased 9%.  These results took away the fear that many investors had that the company had been discounting merchandise.  During the quarter, the company opened 19 new stores bringing the total to 333.  The company intends to open 20 new stores in the 3rd Q and 90 next year.  The stores, all located in 30 states primarily in the northern half of the USA, feature exclusive fashions of women’s clothing.  The current trading price of the shares does not seem to reflect the company’s proven track record nor the scope for continued growth.  Analysts appear to be calling for earnings of $1.85/sh on sales of $290 million for the year ending Feb 2 and $2.30/sh on sales of $290 million for next year.  Based on these assumptions, the stock could very well trade at $45, or 20 times next year’s profits.

Inex Pharmaceuticals Corporation (IEX on TSE) Vancouver, BC, tel: (604) 419-3200. Price: Sept 28/01: $4.88, 52-week range: $9.10-3.26.  First mentioned in this newsletter at $3.71 on April 3/01 and last covered at $6.65 on May 12/01.  Inex announced, on September 5,the initiation of two pilot phase II clinical trials to evaluate its lead product, Onco-TCS, in combination with Rituxan for the relapsed aggressive B-cell non-Hodgkin’s lymphoma (NHL).  Rituxan (developed and co-promoted by Genentech and IDEC Pharmaceuticals) is the first monoclonal antibody (MAb) approved for the treatment of cancer.  Onco TCS is a proprietary drug comprising the widely used off-patent cancer drug vincristine encapsulated in Inex’s patented drug delivery technology: transmembrane carrier systems (TCS).  The TCS technology provides prolonged blood circulation, tumour accumulation and extended drug release at the cancer site.  Including the 2 Rituxan combination trials, Onco TCS is now being evaluated in 6 human clinical trials.  A pivotal phase II/III trial under way at medical centres in Canada and the USA is evaluating Onco TCS as a treatment for second or later relapsed NHL.  In addition, Onco TCS is being evaluated in 3 phase II clinical trials as part of first-line treatment for aggressive NHL, as a treatment for small cell lung cancer and as a treatment for relapsed pediatric malignancies.  NHL is the 5th leading cause of cancer deaths in Canada and the 6th in the US.  More than 300,000 people suffer from the disease in the 2 countries and approximately 61,000 new cases were diagnosed in 2000 and appears to be one of the faster growing forms of cancer.  At an early pre-clinical stage, Inex has also been working on an Oligo Vax therapeutic vaccine platform.  Oligo Vax combines the necessary components, including DNA, a delivery system and one or more associated antigens, to be identified by the immune system as an invading virus or bacteria.  The result is an attack by the immune system directed toward disease cells throughout the body that are associated with the antigen or antigens.  Results from these studies are expected before the end of 2001.  Separately, Inex announced that the January 2001 spin-off, Protiva, has signed a $14.5 million equity financing agreement with leading venture capitalists.  This will allow Protiva to pursue its business of developing and commercializing novel drugs based on gene-delivered therapeutic proteins to fight cancer and inflammatory diseases.  With the first tranche of financing, Inex’s ownership in Protiva declines from 75% to 40% and ultimately to 35 % when the second tranche is completed.

Kohl’s Corp. (KSS on NYSE), Menomonee Falls WI, tel: (262) 703-7000, Price: Sept 28/01: $47.82, 52-week range: $72.24-41.95.  This is the first mention of the company in this newsletter.  Kohl”s Corporation operates 358 family oriented, specialty department stores that feature quality, national brand merchandise.  Their stores, primarily located in the Midwest and Mid-Atlantic States, sell moderately priced apparel, shoes, accessories and home products targeted to middle-income customers.  The company has been averaging a return on assets of 10.7% and on equity of 19%.  Earnings have been growing at a rate of 24%/year over the last 5 years and are expected to continue to grow at an annual rate of 20% over the next 3-5 years.  Balance sheet items indicate cash of $169 million, debt to capital of 27% and 334.6 million shs. out.  Sales for the 4-week period ended Sept 1 were $560 million an 18% increase over last year and same store sales, during a challenging period, increased 4.9%.  Over the last 12 months, Kohl’s opened 52 stores and plans to open 24 new stores in October and 70 in 2002, including 35 to 40 in the first quarter.  This involves entry into the Boston market and further penetration in Texas.  The company currently operates in only 26 states and has set a target to be operating 600 stores over the next 5 years.  One plan is to be entering the Southwest region in 2003, with a significant presence in Los Angeles.  Earnings are forecasted at $1.37 this year compared with $1.10 in 2000 and at $1.67 for 2002.  Because of its proven track record and continuing aggressive growth plans, the share price should command a premium multiple to earnings.  For example, a 35 times multiple to next year’s earnings would indicate a near-term value of $58.

Meota Resources Corp. (MRZ on TSE), Calgary AB, tel: (403) 781-2440, Price: Sept 28/01:$2.55, 52-week range: $5.50-2.40.  This is the first mention of the company in this newsletter.  Meota is a junior oil & gas exploration company that explores for, acquires, develops and produces crude oil and natural gas in western Canada, primarily gas in Alberta and oil in Saskatchewan.  Former officers of Poco Petroleum formed the company in January 2000.  They had started Poco as a junior in 1992 and had built it up into a senior producing 90,000 boe/d until the company was sold to US interests for $3.7 billion.  Insiders own 45% of the 56.3 million shares outstanding.  In fact, one director just recently bought 1.43 million shares to bring his holding to 12% ownership.  During the 2nd Q ended June 30, Poco produced natural gas at a rate of 36.2 mmcf/d up from 35.0 mmcf/d in the 1st Q and oil & NGL at a rate of 3,299 bbls/d, slightly higher than the rate in Q1.  As a result of lower prices for natural gas, cash flow during this 2ndQ came to $15.1 million, or 27 cents/sh compared with 23.0 million, or 42 cents/sh in the Q1.  Revenues for the first 6 months of this year were $67.8 million, up 195% from $22.9 million last year, cash flow $38.1 million, or 69 cents/sh, up from $12.5 million, or 25 cents/sh last year, and net income of $17.7 million, or 32 cents/sh, compared with $8.3 million, or 17 cents/sh during the first 6 months of last year.  The company’s capital budget for 2001 of $65 million included $15 million for acquisitions.  This has not occurred yet.  As a result of this and because of lower natural gas prices, management is now forecasting production for the year to average 9,500 boe/d, up from last year’s 6,100, and for cash flow of $60 million, or $1.06/sh, up from $46 million, or 88 cents/sh last year.  Because of Poco’s growth record and management’s entrepreneurial skills, the shares should command a premium multiple of 4 times cash flow, indicating a stock price level of $4.

Nortel Networks Corporation (NT on TSE and NYSE), Brampton ON, Tel: (905) 863- 0000. Price: Sept 28/01: $8.39June 22/01: C$13.50, 52-week range: C$105.75-7.50.  First mentioned in this newsletter at $13.50 on June 22, the stock continues to act badly in the face of major reductions in worldwide telecommunication cutbacks.  It now appears that Nortel will be hard pressed to achieve revenues of $3.5 billion in the 3rd quarter.  This would compare with revenues of $4.6 billion in Q2 and $5.7 billion in Q1. It now appears that revenues for 2002 will be of the order of $17 billion down from this year’s $18 billion.  The company’s forecast of quarterly revenues of $5 billion was partly based on a reduction of employment of 30,000 workers. The projected forecasts may forcefully entail a further reduction of 10,000 employees, which would bring Nortel’s headcount to 55,000 (back to 1991 levels), in order to bring the company to cash flow positive by the 4th Q of 2002.  Much of the damage to the stock price (high of C$124 over a year ago) appears to have taken place, but the turnaround will take some time.  A C$12 (US$8) price level at some point over the next 12 months could be realized.

Sun-Rype Products Ltd. (SRF on TSE), Kelowna BC, tel: (250) 860-7973, Price: Sept 28/01:$5.65, 52-week range:$6.00-3.20.  This is the first mention of the company in this newsletter.  Based in British Columbia’s fruit growing district, Sun-Rype is a Canadian manufacturer and marketer of juice-based beverages and 100% all-natural fruit snacks with annual sales approaching $100 million.  The beverages are available primarily in western Canada and the food products are gradually being rolled out across the country.  The company is encountering success with its “Fruit to Go” fruit snacks (now the top fruit snack in Canada) and its “Energy to Go” fruit bars (sales of this have grown 37% over the last year).  More recently, Sun-Rype is launching a new “Fruit and Veggie” bar.  For the 2nd quarter ended June 30, earnings of $1.6 million, or 15 cents/sh, on sales of $50.3 million compared with earnings of $1.1 million, or 11 cents, last year.  For the 6-month period earnings of $3.5 million, or 33 cents/sh, on sales of $50.3 million compared with earnings of $2.3 million, or 23 cents/sh, last year.  There are 10.9 million shares outstanding.  Lately, two organizations have been building up their share ownership positions.  The strong Jim Pattison group, through Great Pacific Capital Corp., now owns 1.9 million shares, or 18.3% of the company.  More recently, the investment-counseling firm of McElvaine Investments has built up a position of 1.5 million shares, or 14% of shares outstanding.  The company, while small, appears poised for growth and could possibly be a take-over target.

Upton Resources Inc. (URC on TSE), Calgary AB, tel: (403) 263-7373, Price: Sept 28/01: $2.85, 52-week range: $4.35-2.00.  This is the first mention of the company in this newsletter.  Upton is a junior oil & gas exploration and development company operating in 3 core regions: 1) southeast Saskatchewan where low-cost oil wells are drilled using horizontal drilling methods and are currently producing 3,600 bbls/d of medium gravity oil, 2) North Dakota where production of high-quality light oil is being produced at a rate of 750 bbls/d from long-life reservoir pools, and 3) northwest Alberta where natural gas production is averaging 1.9 mmcf/d and where drilling takes place only during the winter months.  The company plans to drill 24 wells in the second half of the year, compared with 28 in the first half.  Capital expenditures during the first half were $13.6 million in relation to cash flow generated of $16.2 million.  Debt of $27.8 million equates to 90% of annual cash flow.  Upton has filed a normal course issuer bid to purchase up to 10% (1,447,979 shs) of its public share float.  Last year it purchased over 600,000 of its shares at an average price of $2.36/sh.  The company has17.2 million shares outstanding.  With current production averaging 4,728 boe/d, management feels that the company will meet its target of producing at the average rate of 4,500 boe/d.  That being the case, cash flow for the year (heavily weighted to oil) should be about $1.60/sh.  A 3 times multiple indicates a share price level of $4.80.


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