Running the numbers on Endev Energy, I show them paying $25 EV/proved BOE. For reference, my same number on Devon Energy is $16 EV/proved BOE.

I admit my calculations are pretty rough but part of the point in my post regarding the replacement ratios and with the acquisitions is that, currently, PWE is less of an E&P and more of an A&P (Acquisition & Production).

As everyone knows, oil prices are very high right now. And PWE is basically buying oil (via acquisitions) to replace their production.

As of right now, I don’t have a whole lot of oil/gas prospects on-deck. Generally speaking, when everybody is talking about something, it’s best to look elsewhere. My previous investments (ESV, CHK, DVN) were made last year. The run-up in the commodities has driven up the whole sector — even old blowhards on my watchlist like Talisman (TLM) and Vaalco Energy (EGY) have run up 50%+ lately. I’m looking for a pullback but even if the peak oil train is leaving, I’m still maintaining discipline.

Despite my belief that peak oil is correct, I try to maintain a value-investing approach in my energy investments, looking for companies at a discount to NAV or FCF. After all, there’s always a chance that we’re wrong and if so, a margin of safety will cushion the losses.

The reasons I haven’t sold all of my PWE: 1) relatively low downside risk + lack of cheap alternative investments, 2) tax purposes — my position was built up throughout 2007 and I want to minimize short-term cap gains, 3) greed — they still have that nice oil sands position surrounded by Shell and if peak oil is correct, even PWE will benefit to some extent.

I looked at XEC late last year — have no clue why I didn’t buy but as you saw with BAM, happens quite a bit with me.

They have also closed off higher commodity prices bailing them out with the low hedges. It appears that PWE cant fund there dividend from operating CF and will have to continue to reduce working capital and sale assets till the hedges run though.

That pretty much screws all of my calculations up and makes me question management. Reductions in working capital are not sustainable and shouldn’t be included in YOY calculations.

I wonder how much of the 2.8 billion that they project generating is generated via operations and how much of it is asset sales and reductions in capital.

This is really disappointing and really distorts things. Its rough because I thought this would be a good vehicle to ride out peak oil but, that does not appear to be the case.

Management has great assets but seems content with diluting shareholders and acquiring more assets.

What makes you hold instead of selling and redeploying into XEC, CNQ, or something else. Also what other oil and gas investments do you like.

I also hold ESV but, am looking for other options that arent PWE. XEC is mostly natural gas and is a FCF beast, I am hoping to acquire it on the next pull back. Thanks for your comments, Ej.