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It has been the policy of the OTC
Journal to publish a year end review of each of its featured companies
as the year comes to a close. We generally include a recap of the year's
accomplishments and disappointments, followed by our thoughts on the future.
Based on our comments, investors
may wish to add to promising positions or eject losers just before year's
end when small stocks tend to drift down due to lack of interest and year
end tax selling.
Today we are reviewing Energy
Power Systems as it was our best idea in 2001, and yesterday's news
puts this stock squarely in the spotlight for the first half of 2002.
Mid week we will cover Astralis
(OTC BB: ASTR), a company which had blockbuster news earlier this week
which went virtually unnoticed by investors if price action is any indication.
Next weekend's edition will focus on Envoy Communications (NASDAQ: ECGI).
Shareholders are reminded Envoy will announce year end earnings
on Tuesday. Call 800-213-1352 at 4:30 Eastern Time on Tuesday for the post
news release conference call. Cross Media (AMEX: XMM) and MedGrup
(OTC BB: CODX) will be covered the following week.
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Energy Power
Systems (OTC BB: EYPSF) Year End Recap |
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Energy Power Systems was by
far our most successful investment idea in 2001. In a year when nearly
every major index lost ground including the oil and gas sector, Energy
Power was the one stock you all should have made money on.
Energy Power enhanced the
solid foundation of its 30 year old Engineering and Offshore division by
launching an ambitious expansion program through its Oil and Gas Exploration
division.
Throughout the year the company announced
several exciting new drilling and exploration programs in Western Canada,
an area considered by geologists to still contain North America's best
reserves of oil and gas.
At the same time, the Engineering
and Offshore division landed several new contracts, which helped keep momentum
in the stock price. We launched our profile on February 10th, 2001 at $2.95.
The stock has since seen a closing high of $5.69 for a solid 93%
gain. Friday's closing price had the stock at $4.90, up 66%
from our starting point. This performance is particularly outstanding when
one considers we were mired in a horrendous bear market for most of the
year.
When we released our original profile
on February
10th our price target was $5.60. The stock hit that level on
November 12th, thereby allowing our members who followed our advice and
accumulated a position in this stock an opportunity to take a substantial
profit.
A quick glance at the chart provided
compliments of Yahoo! reveals a solid uptrend. The stock is currently trading
sideways on decreasing volume, parked solidly above both its 50 and 200
day moving average. The next volume surge could easily take this stock
to a new high.
Moreover, yesterday towards the end
of the trading day, Energy Power announced preliminary results of
some of its current drilling programs in Alberta and Ontario.
The press release is extremely long
and difficult to interpret if you are not an industry expert. Boiled down,
the
press release tells us the company has discovered either natural gas or
oil at about 80% of the sites it is currently exploring. The more
prolific sites will lead to further drilling in adjacent areas.
It is too early to make assessment
of ongoing production levels and cash flow. However, yesterday's news was
very exciting for shareholders. It demonstrates the company has been highly
successful in launching an ambitious oil and gas exploration program. Improved
corporate performance should follow in the first two calendar quarters
of 2002.
As a result, the OTC Journal
is now ramping up its 2002 price target to the $8 to $10 range.
The company only has a $44 million market capitalization at current levels.
If management continues moving the company forward at this rate, a $100
million market cap in 2002 is possible particularly if the exploration
program yields a major find.
For an updated profile on the company,
click
here for our October 19th edition on Energy Power.
Here is the complete text of yesterday's
news release for your review:
Friday December 14, 1:21 pm Eastern
Time
Press Release
SOURCE: Energy Power Systems Limited
Energy Power Reports On Multi-Well
Drill Program
TORONTO--(BUSINESS WIRE)--Dec. 14,
2001--Energy Power Systems Limited (OTC BB: EYPSF & Frankfurt EPW)
(www.epsx.com; ``Energy Power'' or the ``Company'') announces preliminary
results of its multi-well drilling program.
In October of 2001 the Company commenced
a drilling and exploration program focused on prospective properties located
in proven productive areas of Alberta, Canada. The multi well program involves
partnering and farm-in alliances with other oil and gas companies to share
risk and diversify opportunities. The program initially targeted 8 exploration
prospects which could lead to further development opportunities. 6 of the
8 wells have hit target depth. Based on the available information 1 well
is drilled and abandoned, 2 wells produced oil, 2 wells produced gas, and
1 well had log indicated oil and gas pay from one formation and gas in
another formation.
Farrow, Alberta: The Company earned
a 31.5% interest in a half section of land (320 acres) by paying 75% of
the costs of 4 square miles of 3D seismic data. The well was drilled out
then cased as an oil well and stimulated with a 40 tonne frac which resulted
in a productive response from the Glauconite formation. The pump jack and
battery facilities are in place and the well is currently production testing
and producing oil. Reservoir pressure was measured at 1100 psig and 95
barrels of oil was recovered in 20 hours. Stabilized rates and reserve
size are yet to be determined although a neighbouring well, producing from
the same Glauconite formation, has reported 55,000 barrels of oil production
in the past six years. Further development drilling could allow up to an
additional 7 wells on this half section of land.
Brazeau River Prospect, Alberta:
The Company participated in developing and exploring 2 sections of land
(1280 gross acres) and has a 50% interest before pay out and 25% interest
after pay out in the test well and earned a 25% interest in the earned
section. The test well was drilled and completed as a Rock Creek oil well
and production tested at stabilized rates of 20 bbl/d oil and 100,000 cubic
feet/day gas. The well is currently shut in pending evaluation of a single
well battery.
Olds-Innisfail Prospect, Alberta:
The Olds-Innisfail prospect encompasses 6 sections of land (3840 gross
acres). The initial exploration consisted of 3 prospective drilling locations
of 2 sections (1280 gross acres) each- a test well and an earned section.
The Company has a 25% before pay out and 12.5% after pay out in each of
the test wells and earns a 12.5% interest in an additional section (640
acres) by drilling each test well. To date the Company has participated
in the drilling of 3 test wells and earned a 12.5% working interest in
3 additional sections. One test well is a suspended Basal Quartz gas well
pending completion. One test well is a shut in Viking Gas well that flow
tested at a stabilized rate of 500,000 cubic feet/day and one test well
was dry and abandoned.
Caroline Property, Alberta: The Company
is participating in developing 1 section of land (640 gross acres) and
has a 22.5% interest before payout and a 16.875% interest after payout.
The well was drilled to a depth of approximately 2,800 meters and is being
cased as a Glauconite gas well and an Elkton oil and gas well. It is anticipated
that this well will be completed and on line early in the new-year.
Prince Edward Island Property: The
Company has acquired a 25% interest in a property consisting of 6 exploration
permits (525,000 gross acres) perspective for both conventional and coalbed
methane gas. The property is located within central Prince Edward Island,
Canada and is underlain by Carboniferous and Permian sedimentary strata
of the Maritimes Basin. An exploration program focusing on geophysics has
been ongoing with seismic sections and maps being scanned and converted
to digital format. Approximately 450 kilometers (280 miles) of seismic
lines have been processed to date. Consulting geologist and geophysicist
are recommending the acquisition and or production of further seismic data,
among other sciences, to help in determining an anticipated multi well
drilling and primarily gas exploration program in 2002.
The 2 remaining locations of the
initial 8 prospects in the multi-well drill program are: a 30% interest
in 1 section (640 gross acres) prospective for Belly River gas in the area
known as Cherhill, Alberta and a 10% interest in 3 sections (1920 acres)
in a 3,200 meter Nisku test in an area known as Edson, Alberta. The Edson
prospect has recently been spudded and it is anticipated that the Cherhill
prospect will spud in later this month with results of both wells expected
in January 2002.
The Company is also acquiring additional
acreage in Alberta for further drilling prospects in 2002.
Energy Power also announces that
holders of 400,000 Series II Preferred Shares in the capital of the Company
have recently exercised their conversion rights and acquired 320,000 common
shares and 320,000 common share purchase warrants. The holders subsequently
exercised the common share purchase warrants at $1.50 each for proceeds
to the Company of CDN $480,000. Energy Power plans to apply the proceeds
of the exercised warrants in part to fund its ongoing oil and gas exploration
program and for general working capital purposes.
About Energy Power Systems Limited
Energy Power is an integrated energy
source and service company operating as an Engineering and Offshore Division
and an Oil & Gas Division.
The Engineering and Offshore Division
is currently working on a backlog of contracts which should carry over
to the next fiscal year and beyond. Further development of Atlantic Canada's
offshore infrastructure could feed additional growth for the Engineering
and Offshore Division. In addition the Oil and Gas Division is adding positive
cash flow to fund corporate operations and future development and growth
strategies. At present the Company is expanding its exploration, drilling
and development program to increase oil & gas reserves and production.
There are approximately 8.8 million
shares issued and outstanding in the capital of the Company.
Certain of the statements contained
in this news release are forward-looking statements. While these statements
reflect the Corporation's current beliefs, they are subject to uncertainties
and risks that could cause actual results to differ materially. These factors
include, but are not limited to, the demand for the Corporation's products
and services, economic and competitive conditions, access to debt or equity
capital on favorable terms, and other risks detailed in the Corporation's
Form 20-F and Annual Report.
--------------------------------------------------------------------------------
Contact:
Energy Power
Systems Limited
Sandra
J. Hall, 416/861-1484
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