NOVUS ENERGY (V-NVS) $1.08 +0.01

With the price of oil going down over the last while and costs in

the business increasing rather dramatically, $85.00 oil is certainly

not creating the joy in the oil patch of six and 12 months ago. And

of course with all the talk of the fiscal cliff, it’s scary looking at the

charts of all the oil and gas companies out there. There are very

few of them trading at or near their high for the year and many are

trading at significant discounts to where they might have been.

Novus Energy is one of the very few trading at lofty levels and on

big volume and as we wrote yesterday, we know that discussions

are ongoing about what next for the company.

Yesterday, Andrew McCreath on BNN talked about it as well.

Andrew over the last while has picked up an audience for some of

his insightful suggestions. We believe “Bridgediver” on Stockhouse

got it right in transcribing what McCreath said about Novus

when he suggested, “but what is really interesting about this acquisition

(of private production and land, by Raging River) is that

they are buying all the land around a company called Novus, NVS,

which is a company that I believe a group, 3 different companies

are interested in buying and I would expect a transaction to occur

early in Q1 of next year for that company (Novus). Anyway, it

looks like a good tuck-in acquisition for this company (Raging

River).”

Our own thoughts in this ugly market is that Novus could end

up with three situations...they could be bought out (which isn’t

happening a lot these days); they could be merged with somebody

such as a Raging River (which lately hasn’t worked out for companies

like Pinecrest Energy and a long list of others); or nothing

could happen (which we suspect could drop the price back to

where it was a few weeks ago). So which one of the three scenarios

will happen?.............

We need to hear something positive, so Martin King of First

Energy Capital writes, “Last week, Aeco natural gas prices hit their

highest level in the past two years. This underscores what has

been a solid rally for North American natural gas prices in the past

month or more. We expect price strength to continue into 2013,

and prices to date have substantially outperformed our expectations

for 4Q12.

Why you need to read this: 1. Aeco prices have reached two

year highs in the past week and have been trading very close to

benchmark U.S. Henry Hub prices. 2. Aeco price strength is stemming

from the overall rally in North American natural gas prices,

with the tight price differential likely reflecting tightening supply

conditions in Western Canada. 3. We expect the price strength to

be sustained for 4Q12 and well into 2013, merely adding to our

already price bullish stance for North American natural gas prices.

4. Remain long and get longer the natural gas equity space