IRADESSO QUARTERLY - BMIR - Bryan Mills Iradesso

mESSAGE fROm thE pRESIDENtFor the love of weather clichésIt’s human nature to want to talk about the weather. Unfortunately, For any dismal natural gas-focused company (or investor) out thereit hasn’t really been a pleasant conversation for Albertans thisthat saw disappointing second quarter results from pricing andsummer. It seems like the eastern part of the country might have weather delays, we’d like to help pull you through by rememberinghogged all of the heat and good weather this year.that every cloud has a silver lining, and after the rain comes therainbow. If that doesn’t do it for you, then how about red ink atThe weather discussion even made its way into many intermediatenight, sailor’s delight?and junior oil and gas companies’ second quarter reports this year.We heard numerous times that drilling programs and operations At Bryan Mills Iradesso, we continue to be busy helpingwere stalled by the wet weather. Because of this, many companies many energy industry companies communicate with theirreported lower-than-expected production volumes and cash flows stakeholders. It’s not a surprise that the energy industry hasfor the period. In effect, they were blaming their results on the rain. many communications challenges. These challenges range fromhow to communicate about strategy and technical approaches toInvestors can take comfort in knowing that oil and gas plays never getexploration and development, to the need to communicate aboutcompletely rained out, they only get delayed. And although weatherenvironmental and social responsibility from within an industrycan play a factor in timing, and on a bigger scale, commodity pricing,that produces pollution-emitting fuel. To invoke another cliché, thethe weather can’t totally ruin a crop the way it can in farming.oil and gas industry needs to show that it doesn’t have its head inSpeaking of weather clichés, this is an industry where we like to talkthe clouds when it comes to environmental issues. I believe thatabout commodity prices by referencing the perfect storm. The lowjust like the end-users who actually burn the fuels, the majority ofnatural gas prices we are experiencing now are not the result of athis industry doesn’t have its head in the clouds.perfect storm, more like the result of a steady nagging drizzle. OurI’d like to close by emphasizing the purpose of the iQ Report.comparisons are getting stale when it comes to the high price of oilThis report is meant to educate readers on the dynamic Canadianrelative to cheap cost of the same energy equivalency in natural gas.intermediate and junior oil and gas industry, while drawingIt has been more than a year now of the two main commodities in thisattention to some of the considerations for making investments inindustry being grossly out-of-step with one another. It seems to havethe sector. We also shamelessly try to build on our credibility whilebecome a fact of life, which probably means we’re due for a change.drawing attention to snapshots we have provided for some of ourThe facts are that the fundamentals for natural gas have been tooongoing clients. I hope you find this report useful in serving theseweak for too long. Even the companies that were most focused onpurposes.natural gas have started to give in and shift their focus to oil. TheBlue skies ahead,median junior oil and gas company has actually seen success indropping its natural gas production weighting from 75 percentof production in the third quarter of 2009, to 65 percent ofproduction in this most recent quarter. The production mixes beingreported by the juniors are starting to reflect more investmentsPeter Knappbeing directed to oil. I anticipate that this drop in gas weightingPresident, Bryan Mills Iradessowill continue over the next year as such a high number of drillingprograms are targeting oil rather than gas.