Canadian 88 considers selling properties

Canadian 88 Energy Corp., Calgary, says it will consider selling some or all of its properties because its share price does not reflect the value of its assets. The announcement of the possible sale of the mid-sized natural gas producer comes 7 months after Duke Energy Corp. bought a 20% interest in the company in March.


CALGARY�Canadian 88 Energy Corp., Calgary, says it will consider selling some or all of its properties because its share price does not reflect the value of its assets.

The announcement of the possible sale of the mid-sized natural gas producer comes 7 months after Duke Energy Corp. bought a 20% interest in the company in March.

Joseph Pritchett III, a former Duke executive who heads Canadian 88, said it may be time to realize value in the company.

Pritchett said the company has a lot of high-impact prospects and good tax pools. He noted Canadian 88 is especially strong in natural gas prospects at a time when good prospects are in short supply.

Duke�s initial $50 million (Can.) investment was tactical. It saw value in assets that were not priced correctly in the marketplace, Pritchett said.

The company has an estimated $420 million (Can.) in tax pools which could be applied against taxes by a buyer.

Shares, which traded at $1.80 (Can.) in March when Duke bought in, rose to $3.85 Aug. 10 on the Toronto Stock Exchange on word of a possible sale.

Canadian 88 has properties ranging from the Rocky Mountain Foothills region of Alberta to off Nova Scotia on the East Coast. Its assets include the Waterton natural gas field in southwestern Alberta with reserves of 500 Bcf. The company produced 84.3 MMcfd of gas in the second quarter, a drop of 19% from the same period in 1999.

Greg Noval, the controversial former CEO of Canadian 88 who founded the company in 1988, left company management following the Duke buy-in. Noval remains a director of Canadian 88 and owns an 8% interest in the company.

Noval was noted for a number of hostile takeover bids, including attempts to take over Morrison Petroleums Ltd. and the Canadian unit of Texaco Inc.

More recently, Canadian 88 share values fell prior to Noval�s departure after the company failed to meet production targets.

Companies named as possible buyers by analysts include Kerr-McGee Corp. which has interests with Canadian 88 off Nova Scotia, Murphy Oil Corp., which recently bought Beau Canada Exploration Ltd., Devon Energy Corp., and Talisman Energy Inc.

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