The number of junior exploration and production companies and conventional energy trusts appears to be on the upswing, according to a survey by a Calgary-based consultant of 83 publicly traded juniors and 31 Western Canadian trusts.
Iradesso Communications, which publishes the iQ report on Canadian energy companies, surveyed 1Q2005 results and said that of the 83 publicly traded juniors with production ranging between 500-15,000 boe/d, 20 companies are new since another survey six months earlier. Five of the 31 Western Canadian conventional energy trusts also are new to the survey.
"There are more conventional energy trusts and more publicly traded juniors in this report than we have ever seen," said Iradesso President Peter Knapp. "Company lifespans are short and everybody appears to be in a rush. Geologists, engineers and business people don't want to miss their chance to make big dollars while the commodity cycle is in their favor."
The iQ report compared statistics for juniors and trusts ranging from cash flow multiples to changes in quarter-over-quarter production levels.
The report found that juniors have a "much higher weighting" to natural gas production than trusts. For juniors, the median weighting was 69% natural gas production, while trusts had a median weighting of 53% natural gas.
"Natural gas lends itself to exploration activities while the other alternative, crude oil, is a more mature resource is more suited to long-term recovery efforts normally associated with trusts," the report stated.
The iQ report also found that the average share price increase for juniors during 1Q2005 was 16%. The average total return for the conventional trusts during the quarter was 8%, including unit price changes and distributions paid during the period. However, the report noted that in April and May 2005, junior share prices lost 6% on average, while energy trusts lost an average of 2% when combining unit prices and distributions.
Junior companies surveyed that showed the largest share price gains in 2005 up to May 31 were Pilot Energy Ltd., up 99% from C$0.75-1.49; Accrete Energy Inc., up 92% from C$3.85-7.40) and Petrobank Energy and Resources Ltd., up 63% from C$2.32-3.79). The three trusts with the largest increases in unit price plus distributions were Petrofund Energy Trust, up 22.5%; Vermilion Energy Trust, up 18.9%; and Bonavista Energy Trust, up 18.2%.
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