A Comment -- General Comments From an Expert (A Commentary)

Alberta is the most attractive place to invest in energy in the world because of its huge resource base and less exploited than the US. Located adjacent to the largest market in the world that has a voracious appetite for oil and gas. The only area in the world that has the real resources for continually growing oil production as far in the future as we can see.

Close to 100% of his investments are in energy with 60-65% in Canada. Not concerned about the rockiness of the sector as he has been in a lot of them before.

We have had an unusual weather event in that January/06 was the warmest in all recorded history of the US. If there were no capital dollars used this year to increase gas production, total gas production would fall about 32%. We have to keep increasing drilling to keep production from falling.

Liquid Natural Gas - Significant expansion of LNG producing capacity in the world and there will probably be a tripling of total production in the next 10 years. Analysis shows that very little is imported to the US as gas prices are higher in Europe and Asia. Won't have any significant influence on the supply balance.

The downturn in oil prices in 1998 came about due to world pressure on the US to remove the embargo on Iraqi oil at the time of the Asian currency crisis. Currently, it would take a major recession in the US to decrease the demand for oil to bring prices down to the low $30’s.

The need to reduce strategic reserves in the US is very remote. The treaty was signed by all the OECD countries and every country is required to maintain certain levels.

Hydrogen - On the basis of current technology, the production of hydrogen requires a great deal of energy, the most direct way being electrical energy to split water into hydrogen and oxygen. Not a very good approach at this time.

Coal to produce liquid fuel - This is a method used by South Africa because they had no oil. The technology has been well demonstrated but is a relatively expensive process. Until the world runs one of cheap, plentiful supplies of natural gas, it probably doesn't make any sense.

2-year U.S. Treasury Note. A bit of a contrary call. Yields about 4.65%. If the Canadian economy and oil/gas continues to slow down, and the CDN$ weakens, this will give you a 6/7% return.

Recommends These Gas Trusts - Progress Energy Trust( PGX-UN), Peyto Energy (PEY-UN), Fairborne Energy Trust (FEL-UN), and Focus Energy (FET-UN). Avoid trusts with high payout ratios, high debt, and high declining gas assets with low reserve life.

Believes money will be in invested in large caps. It is important to have a dverse portfolio. Resource stocks may go down further. Put money into bonds.

Government of Canada- 10 year Bond A portion of your portfolio should be in bonds. It is a great safe place to be.

Global Economy has slowed down. Will pick up in retail. 2/3 GDF is consumer. We are in a commodity cycle.

Qualitites Of A Good Income Trust-It has the ability to increase distrubution over time. low pay out ratio and low debt. (consider foreign exchange as well)

Small and Large Cap Outlook- Small caps have outperformed for the last 7 years. In the next 12-18 months you will see more interest in large cap securities.