Cuervo Resources Inc CRVNF

RE: TEXT FROM THE BILL DAVIS - corrected

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typos and wrong words corrected in this version. Well, it's name says it all. FIND ENERGY is finding more oil and gas in Alberta’s oil patch. Up next a chat with president and CEO Bill Davis about drilling in the west and the stock has rocked 300% higher. Ok, one more time, where do we stand? >> Bruce: FIND ENERGY may be the poster child for the small but mighty plays in Canada these days A. With a market cap of $437 million find's oil and natural gas assets are focused here in the Alberta region. In the past year find has found success with its drilling program and last year it drilled 63 wells with a 95% success rate. That hasn't gone unnoticed by investors in just one year the stock is up 311% hitting a new 52 week high today. For more I'm joined by bill Davis president and CEO of FIND ENERGY. Thank you very much for being here. >> Bill Davis: Thank you. >> Bruce: Lets start off with the assets, obviously there are a ton of companies with a lot of properties throughout the province of Alberta. Tell us specifically where yours are and what they're skewed to. Natural gas I understand. >> Bill Davis: Natural gas. Natural assets are in the Pembina area of Alberta. One of the most principal producing areas in the province. Been established since the 60s with production from shallow horizons than we’re currently drilling for. >> Bruce: Tell us about the drill results that you've had so far. >> Bill Davis: Our drill results have been excellent so, far. Pardon me. We've had a tremendous success rate. We drilled in our principal operating area Pembina now 65 wells. We've had tremendous reserve ads for each of those wells or for the aggregate of them put together. We're looking to drill another 130 wells on the land base that we have at Pembina. Be twice as much as we have drilled so far. We established built a natural gas processing plant at the end of last year and already have that plant completely full have announced that we'll be expanding it from 30 million cubic feet a day to 50 million cubic feet a day. >> Bruce: You have expanded your capital budget to $110 million. Where is that money going to go? >> Bill Davis: About 80% of that money will go into the Pembina area. Almost two-thirds go into drilling and completing wells. Another $30 million or so will go into the new facility as well as well site fits and gas-gathering pipelines to bring gas to the new plant. About 13 million dollars will be devoted towards acquiring new lands and drilling opportunities in the area. >> Bruce: This is obviously an incredible time for companies like yours given the backdrop of very strong commodity prices in both oil and natural gas. What are the estimates that you're including in your financial models to determine the economics of some of the endeavors that you're embarking on? >> Bill Davis: We model in two different ways. We model with a fixed price that we hold constant for a year and we also model based on the commodity price strip that's in front of us at any given time. Generally we rely on the strip pricing for most of our financial estimates. >> Bruce: Take me further into the future than just the rest of 2006. Five years out how big a company are you? >> Bill Davis: We could be a company five years out that's easily two or three times the size we are now. >> Bruce: Where would that growth come from? >> Bill Davis: Most of that growth will come from our principal asset in the Pembina area. We really think we can take the size of our reserve base up by three or four times based on the drilling inventory we've established so far. >> Bruce: Now tell us about your cash position and I'm going to answer my own question it doesn't like you're all that inquisitive these days. >> Bill Davis: No We are drillers. We are grassroots exploration. We conceive of the prospects ourselves. We acquire the land to drill those prospects and the right to produce the hydrocarbon. Then we have been building the facilities to produce them and take them to market at the lowest possible cost. >> Bruce: Do you think that makes you more or less attractive to investors. Some people would say a company that's willing to grow through consolidation can lever the cash they have in the bank account? >> Bill Davis: Depends on the investor. We're very attractive to certain investors who can understand how much value can be added trough a successful drilling program such as the one we have conducted. We found our oil and gas last year on approved and probable the basis for $11.51. We achieved an average net back, after all costs are deducted from the price of the commodity that we receive, some $32 a barrel of net operating income from each of those. Our cash flow net back was $32 and our finding costs were $11. >> Bruce: The prevailing view is that there will be more consolidation for energy companies in the west. How do you believe that will play out for you. Are you a takeover target what's your sense? >> Bill Davis: Most of the small companies such as ours eventually are consolidated into larger companies or into a royalty trust or into some other entity whose basic strategy is acquiring oil and gas reserves once they've been established through an exploration program like ours. What happens in the future it's very difficult to predict. But we do think we're buildings an asset that is attractive, it's got great economics associated with it. We'll continue to drill it for other number of years and realize the value that we've identified with it. >> Bruce: We interview analysts all the time that focus on juniors. One of the things that they repeat time after time is the importance of management particularly for companies that are the size of yours. Tell us about your CV what are the highlights what should investors know in terms of yourself and the team you've assembled. >> Bill Davis: They should know it's almost 25 years that I've been in the oil business. They should know that the team we have at FIND ENERGY, that many of that team are alumni from Canadian hunter exploration. So we've been working together some of us for 18 years at this stage of the game. We built a successful company it's called search energy converted I had it to a royalty trust in may of 2000. Gathered up again and began to build the company that we have here now FIND ENERGY. The management team at FIND is extremely well qualified and has worked together substantially in the past. We understand one another well we make quick decisions, got a great, great level of communication within the company. >> Bruce: Given your in the life cycle of your business it sounds like any spin-off into an income trust would be fairly far in the future. Is that accurate? >> Bill Davis: It’s certainly not on the threshold and from our planning point of view that's exactly accurate. We're going to be continuing to on drill our assets. We think we can drill them better than anyone else and bring the product to market more efficiently than most of our on competitors. We've got a tremendous competitive advantage in the Pembina area with our land base. And a terrific drilling inventory to begin to work on >> Bruce: What are the risks. Obviously your stock has factored in a lot of optimism. There are a lot of people that have made some money off that performance in the last 12 months What are the risks that investors should be aware of? >> Bill Davis: There's the general risks in the industry. There’s always the commodity price risk altho we’re bullish on natural gas. We think that the low that we're experiencing now we're coming out of. There is risks for smaller companies to acquire land. It's very expensive although we have established a very enviable land position. There's a risk to get services for, the development of our properties although we have secured them and have long-term loyal relationships with those service providers, We think we have some distance to identify the risks that could affect the business and have addressed them the best we can. >> Bruce: Bill Davis president and CEO of FIND ENERGY.