Hello Bob.... you are correct that they use a similar process in evaluating reserves such as PCA, Esso, etc... however, I disagree on their use of independent reserve committees who are not arm twisted by Senior Management. Companies such as AEC, Esso, PCA etc... use these whereas EEE does not. It is not unheard of in the patch for Reservoir Engineers in the patch to be fired for not penning their name to reports that they do not agree with. The new Securities Regulations in Canada should address this issue, however that will take time and must be adopted by all the Provincial Securities Commissions (see article below) HOWEVER, NEWS FLASH. Keeping the last sentence in mind, EEE on Stockwatch just posted a news release indicating that they intend to delist from the CDNX exchange. I hope they do not intend to delist from all the Canadian Exchanges and trade only on the American Exchanges, where the new Cdn rules (if they come into effect) would not affect them. What could that infer? I agree that the recent hedge expiry should help cash flow as well as any new oil and gas production. Still, I find it hard to believe that all these new reserves and production add up to todays production figures. If you review past news releases (ie: Olds Plant at 70MM; Waterton at 60 MM; Cheddarville; Wildcat Hills; etc...) production would be much higher than it is today. The bottom line is the markets are now adopting a "show us the gas/production" attitude and will not rely on verbal projections. I am a shareholder... a small postion, in the red. No I cannot prove that reserves are not what they are stated to be, just as much as you cannot prove that they are. I guess the market will tell you.. the market can be very smart. Perhaps a takeover will tell you when another set of eyes looks into the books... either confirming or disproving past statements. SD Friday 14 January 2000 Watchdog tough on oilpatch ASC calls for tighter rules on reserve estimates Chris Varcoe, Calgary Herald In a move designed to strengthen investor confidence in the oilpatch, the province's securities watchdog is moving closer to beefing up reporting rules for public energy companies. The Alberta Securities Commission announced Thursday a special task force has approved 150 "principles" to help tighten up corporate disclosure rules on financial matters and oil and natural gas reserves. The interim report, which must be adopted by provincial securities commissions across the country, is expected to improve reporting -- and investor confidence -- in the oilpatch, a sector hit recently by several high-profile corporate collapses. "People in the industry should look at this as positive news," said mutual fund manager Bill Wheeler of Leith Wheeler Investment Counsel and an outspoken proponent of tougher industry regulation. "There has been a whole string of (oilpatch failures) and I think there is a credibility gap. Too many people have been burned." The task force was assembled in June 1998 to improve public disclosure guidelines, some of which haven't been updated in two decades. ** Since that time, the reliability of reserves reports -- evaluating the amount of oil or gas in the ground --has been placed in the public spotlight. ** The ASC is investigating the December 1998 takeover of Blue Range Resource Corp. by Big Bear Exploration Ltd. After the hostile takeover was completed, Big Bear took a $152-million writedown and alleged it found a discrepancy in Blue Range's stated reserves -- a claim disputed by former management. The case, along with a handful of problems at smaller oil and gas producers, has made investors skittish, but Canada has tougher disclosure rules than in the United States, said oil and gas analyst Martin Molyneaux of FirstEnergy Capital Corp. "We've seen a few blow-ups in the last 18 months, but keep in mind . . .that it's kind of one bad apple that's making everybody else smell bad," he said. In its report, the task force proposed: - Public companies should have a special committee comprised of independent board members to review oil and gas reserves; - Producers should disclose changes in reserve levels, price forecasts, undeveloped land value, future development costs and remaining tax pools; - The definition of reserves should be categorized, with each category reflecting the "numerical" probability that oil or gas will be produced. The recommendations likely won't come into effect before 2001 but will eventually provide the public with more consistent information, said Henry Lawrie, the task force chairman. "As regulator, we want investors to get the information that they need," said Lawrie, the ASC's chief accountant. "The best issuers disclose all of this stuff already." For example, large producers such as Alberta Energy Co. Ltd. and Anderson Exploration Ltd. already have special reserve committees with independent directors looking at reserve reports. "We are already doing most, if not all, of the things that were recommended," said Randy Eresman, president of AEC's oil and gas unit. While the guidelines will eventually add extra costs to junior oil producers, they will pay off if investors feel more secure and pump additional money into the industry, said Keith Macdonald, chairman of the Small Explorers and Producers Association of Canada. "Investors want to go to the annual report and feel they know the value of the company," he added.