Vulcan Minerals Inc V.VUL

Vulcan recommended a buy by Jenningd Cap.

[lhynes]

Andy Gustajtis has just released a reaearch report on Vulcan...as a speculative buy, with a 12 month price target of $.80 - $1.00. Here is a summary of that report: VULCAN MINERALS INC. ( VUL TSX –Venture - $0.25) Recommendation: SPECULATIVE BUY 12-Month Target: $0.80 Sector: Oil & Gas Analyst: Andy Gustajtis e-mail: [e-mail] Associate: Diane Braxatoris e-mail: [e-mail] Tel: [phone] Fax: [phone] Date: Wednesday, September 10, 2003 Market Last $0.25 12 Month High $0.34 12 Month Low $0.14 Fiscal Year End 31-Dec Shares - O/S Basic 15,659,753 Shares - O/S FD 16,759,753 Market Capitalization - Basic $3,914,938 Total Net Debt. (06-30-03 Estimated) ($264,655) Enterprise Value $3,650,283 Andy Gustajtis 9/10/2003 R E S E A R C H R E P O R T Ø Vulcan Minerals Inc., based in St. John’s, Newfoundland, is a junior oil and gas exploration company. Currently, the Company has no production and is dependent on equity markets to raise the necessary funds to continue its operations. Exploration is a high-risk activity, requiring a continuous supply of high-risk capital to test geological models and concepts. The discovery of economic deposits can bring high rewards to those investors who are prepared to speculate on the outcome of such ventures. Ø We believe that Vulcan justifies such speculation, and this research note is designed to provide a brief description of Vulcan and its Flat Bay oil discovery located onshore western Newfoundland. The Company recently filed a “Development Plan” pursuant to the Provincial Petroleum Regulations with respect to the 1999 Flat Bay #1 oil discovery. The western portion of the island of Newfoundland is at very early stage of exploration that effectively began with modern exploration techniques in 1995. Ø Mr. Patrick Laracy, the Company’s founder and President, is both a geologist and a lawyer. Oil seeping from the ground near Parsons Pond onshore western Newfoundland inspired him to form Vulcan Minerals. The geologic targets are an extension of proven petroleum systems that extend along eastern North America from Texas and the Appalachian region. The Flat Bay oil discovery has strong similarities to oil production developed in Tennessee and Kentucky over one hundred years ago. Ø Vulcan has a 100% working interest in Flat Bay petroleum permit 96-105 in western Newfoundland. The Flat Bay permit covers about 70,000 acres of the under-explored northern Bay St. George Basin. In September 1999, Vulcan drilled a test well, 286 metres deep, to investigate a shallow oil occurrence in a previous mining hole. This well encountered significant oil shows over a very encouraging thickness exceeding 100 metres in the form of fluorescence in cuttings and oil in the drilling fluid. The gravity of the oil was 34º API and the sulphur content was less than 1%, making it a light, sweet crude. The fact that such light oil exists at a shallow depth is evidence of the integrity of the seal rock, which has not allowed flushing of the reservoir by surface water. This shallow discovery shows there is an active oil system in the area. Ø Vulcan was recently successful in acquiring two new permits (03-106 and 03-107) adjacent to its existing permit 96-105. As a result, the company has amassed a series of petroleum targets ranging in potential aerial size from 5 to 100 square kilometres. Vulcan is the largest landowner onshore the Bay St. George Basin, controlling about 236,000 acres (the Flat Bay Property). Ø The Flat Bay #1 well (drilled on the old permits) was suspended pending a review and further testing after appropriate stimulation. Much of the well has low porosity in the oil section based on geophysical log interpretation. However, a recent well inspection indicates that it is capable of flowing unaided at 5 bopd. Ø The Flat Bay Prospect is a large, seismically defined structure covering 20 sq. km. Using reasonable assumptions on oil thickness (i.e. 25m), porosity (i.e. 14%) and recovery rates (i.e. 25%), the implied recoverable oil reserves could be in the order of 50 million barrels. It must be stressed that further work needs to be done before one could draw the conclusion that this prospect merits commercial development. Nevertheless, encountering live sweet light oil argues strongly to consider the merits of this play as very encouraging. Ø Vulcan’s development plan in the first phase proposes the stimulation of Flat Bay #1 and the drilling of Flat Bay #2 located approximately 1.5 kilometres east of Flat Bay #1, to a total depth of 800 metres. It is anticipated that the Flat Bay oil pool may be initially developed on a single well battery basis, allowing for incremental expansion with step-out development wells. These first phase operations are anticipated to commence in late 2003, with the stimulation of Flat Bay #1, followed by the drilling of Flat Bay #2. Further delineation drilling is planned in 2004. With these activities pending, it is now timely to consider Vulcan a buy. Ø The Flat Bay area is situated in the Bay St. George Basin, a Carboniferous aged basin. There are two known potential reservoirs within the Carboniferous of the Flat Bay Prospect. Carboniferous source rocks are proven to be mature by virtue of the oil discovery in Flat Bay #1. Carboniferous evaporites provide excellent sealing rocks for the potential Carboniferous reservoirs. The ingredients for multiple oil fields within the Carboniferous Bay St. George Basin are in place. Ø The speculative merits to consider Vulcan are as follows: the Company has discovered a new oil system; the Company has 100% interest in over 200,000 acres; the Company’s market capitalization is discounting to a very negligible amount of what could be a sizable oil discovery. Successful stimulation of Flat Bay #1, and/or the confirmation of a following well in Flat Bay #2 could support a much higher valuation - we expect speculative interest will permit a share price in the $0.80 to $1.00 to be achieved – WE RATE VULCAN A STRONG SPECULATIVE BUY. For more information go to www.vulcanminerals.ca