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Four analysts and top management from sixteen sector firms examine the canadian energy sector in this special 74-page Canadian Energy issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info503.htm

TWST: Gord, would you add anything to an industry status report?

Mr. Currie: That’s a fair comment. They also outperformed the rest of the TSE Index by a small margin. It depends on what you’re looking at. I think the integrateds performed quite a bit better than the producers, but both groups were in positive territory for the calendar year 2001, while the TSE lost a bit of ground. We’ve got the integrateds gaining 18% in the year and producers gaining 3%, and the Oil & Gas Index was up 6% versus a loss of 14% for the TSE 300. So it was one of the better performing sectors in the TSE last year.

TWST: Gord, what do you include in your coverage of the Canadian energy industry?

Mr. Currie: I cover the integrateds, of which there are five. I also cover half a dozen senior producers, which includes any company that produces over 100,000 barrels of oil equivalent per day. Intermediates we classify as producing anywhere from 10,000 to 100,000 barrels of oil equivalent per day, and juniors produce anything under 1,000. So we cover over 30 companies in total.

TWST: Gord, are these challenges strictly Canadian? What differentiates the Canadian energy companies from their North American and global counterparts?

Mr. Currie: I think there has actually been less and less differentiation. We think that the Western Canadian Sedimentary Basin is getting to be a pretty mature place to explore. Ten years ago we used to say that it was much less developed than the continental United States, and that’s probably still the case. But we have drilled over 300,000 wells in western Canada over the past 50 years, which is roughly one per square mile, so it’s getting to be a tougher place to find hydrocarbons. Consequently, we’re focusing more of our attention on frontier areas — such as the East Coast offshore, the oil sands, and Northern Canada — as well as international areas.

TWST: Gord, do you have any comments on the Canadian juniors?

Mr. Currie: Just to expand on Matt’s thoughts, I think there are two challenges for juniors, and the first one goes back to the issue of access to capital. There’s been a really interesting development here. There’s been an enormous amount of private equity made available to small companies, so there are many what I call start-over companies or management teams that were bought out that have begun again and raised some private equity. They’ve got three, maybe five years in which to go and get that invested before there will be pressure on them to provide liquidity, either by selling the company outright or taking it public. So that’s an interesting development because these small companies, the 10 million to 20 million market cap companies, they’re small cap in Canada and they’re tiny in US capital markets. Then the other challenge is just access to resources. The remaining pools in western Canada tend to be smaller and deeper and harder to find, and of course there is new technology that helps that process. So there are going to be some that will try to make a living by exploring in western Canada, and there will always be enough to go around for smaller companies. And then there will be others, as Matt said, that are going to be looking to buy assets from Devon and Burlington and others that are trying to do a little bit of streamlining.

TWST: Gord, what’s on your buy list today?

Mr. Currie: Let me run down a few in the different categories. The integrateds are all extraordinarily well financed and they all have interesting opportunities. If you had to pick one, we would pick Petro-Canada (NYSE:PCZ) just because they’re exposed to all of those Canadian frontier areas and have the ability to go international, which of course they just did very recently, with their acquisition of Veba. The market didn’t really appreciate that. The stock has settled several dollars, but we continue to like Petro-Canada.

This special issue includes:

1) Canadian Energy - In an in-depth (9,400 words) Analyst Roundtable, May Shen Chiliton, Vice President of Oil and Gas Equity Research at J.P. Morgan Chase, Gordon Currie, Oil and Gas Analyst at Canaccord Capital Corporation, Matt Janisch, Managing Director, Head of North American Energy Research at BMO Nesbitt Burns, Inc. and Philip R. Skolnick, Equity Research Analyst at Lehman Brothers, examine the outlook for the sector including investment approach, future outlook and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance of twelve sector firms asked market insiders about the ability of management teams to create shareholder value.

3) CEO interviews (average 2,500 words). Top management of sixteen sector firms examine the outlook for their firm and the sector.