The Company (www.wyndevelopments.ca) is following a shrewd strategy of farming-in (earning-in) as a minority partner on ‘company maker’ drilling programs. Ones that are operated by industry heavyweights with proven track records of success in this under-developed, hydrocarbon-rich region.

 

Furthermore, this ideal scenario offers investors considerable leveraged exposure to ‘elephant-sized’ targets and other emerging natural gas fields (like the Halfway pool discoveries) on a very cost-efficient basis. At the same time, Wyn’s currently undervalued share price is underpinned by very strong fundamentals, which we will soon discuss.

 

Indeed, SmallCapMedia’s belief that Wyn has exceptional growth potential is underscored by our solid track record for identifying up-and-coming stocks. Ones that have quickly become high-performance standouts in the natural resources investment sector. Thus, we believe that Wyn is yet another winner in the making.

 

We will now discuss the Company's key value drivers. All of which should propel Wyn into the highly profitable realm of North America's fastest emerging mid-tier natural gas producers. And all within the next several years.

 

This corporate assessment will first discuss the 'sizzle' in Wyn's story – the Prophet Lake Project. Then we'll talk about the 'steak', which involves Wyn's involvement in the recent discovery of an important new natural gas field.

 

This milestone discovery means that Wyn is already on-track for production revenues from the first several wells to tap into this new hydrocarbon-rich find. In due course, the advent of many more offset wells coming on-stream could eventually generate Wyn millions of dollars in monthly revenues. More on this later.

 

A World-Class Natural Gas Discovery at Prophet Lake?

The high-impact Prophet River drill program is a syndicated Cdn. $11-million-dollar-plus project that is being managed by one of North America’s largest and most successful natural gas producers. However, in the cloak and daggers business of natural gas exploration, many powerhouse players safeguard their competitive edge by remaining secretive about their exploration activities.

Hence, the senior partner in this high-stakes venture prefers to remain anonymous at this time. We’ll just call it Corporation X. What’s most relevant here is that Corporation X is a well-established energy sector hotshot that boasts an impressive track record for successfully commercializing big discoveries. 

Accordingly, this major league player has a 35% working interest in the project and can elect to convert its stake into a 12.5% gross overriding royalty. This must occur within 30 days of receiving test information from the well.

 

So what’s at stake? It involves the drilling of a deep well which exhibits multi pay-zone potential in the Peace River region of northeastern BC. But the ultimate prize lies as much as three kilometers beneath the earth’s surface. This is ground-zero for the twin ‘elephant sized’ Slave Point targets.

All of the prolific geological structures that have been targeted have been identified by way of sophisticated three dimensional seismic surveying (sub-surface scans of prospective geological formations).

 

With the benefit of this invaluable data, the senior geologists at Corporation X are in no doubt as to the awesome potential of these premier prospects. In fact, they have publicly stated that the Slave Point targets may be in the order of magnitude of 96 billion cubic feet to as much as 227 billion cubic feet of gas (BCF). To put this in perspective, a base case scenario for this reservoir to become a money-maker would be a minimum of 25 BCF.

 

Additionally, the project is situated at the northern margins of a well-established geological trend that encompasses a number of other major producing hydrocarbon formations in the region. They include the Clark Lake reservoir – another huge Slave Point discovery – that has been a prolific natural gas producer since 1957.

 

Furthermore, a crucial component of the appeal of the Slave Point targets is the fact that an abundance of dolomite provides excellent porosity and permeability in these reef formations. This significantly increases the likelihood that the extraction of the natural gas will be economically viable.

 

Drilling a Dream

A summer-long, three-month drill program recently successfully bored down to total depth (about 3,100 metres) at the Slave Point horizon or level. And now a ‘completion’ rig is on-site, which is a very encouraging sign, especially since this involves a further $1.7 million expenditure that would not likely be forthcoming unless there is a strong probability of success.

 

In spite of the secrecy surrounding the ongoing drill project, certain reasonable assumptions may be made. In short, these ‘completion’ developments mean that the joint venture partners are readying the well for fully operational status (a priming for possible production).

 

In turn, the well is about to undergo production testing to evaluate potential pay zones, beginning with the deeper Slave Point targets. This will provide a timely commercial appraisal of the well’s overall potential and should be completed within weeks.

 

Having said that, there are no sure things in oil & gas exploration. This is because any one of a whole host of potential technical difficulties can sometimes spoil what initially looks like a success. Yet, finding the oil or gas is only half the battle. Finding a way to economically extract it from its host rock formation often represents the other major challenge.

Playing in the Big Leagues

Huge multi-billion dollar natural gas columns that are known to exist at the Slave Point horizon are rare and elusive quarry in this part of the Western Canada Sedimentary Basin. But they do exist. And ordinarily only major oil & gas companies have the deep pockets and geological expertise, as well as the necessary experience, to hunt them down.

 

Yet, a serendipitous turn of events has allowed Wyn to earn-in on a prestigious Slave Point project. In essence, this represents an unprecedented opportunity to work shoulder to shoulder in the pursuit of a billion dollar discovery with a household name in the North American natural gas business. Few low-capitalized energy companies ever get such an opportunity. And Wyn may be within weeks of enjoying a fairy tale ending to its shot at the big time.   

Wyn has a 21.67% working interest in the deep Slave Point test well to its total basement depth of around three kilometers. This also includes 11 sections (square miles) of surrounding lands. Notably, the drill program also involves the testing of several sub-surface geological horizons (or strata) for secondary targets – each of which could be an economically lucrative gas pool in its own right.

Likewise, the Company has also earned the right to drill up to several offset wells on another 10 equally prospective land sections to the south that adjoin the partners’ initial land holdings. Wyn maintains an identical working interest in any such subsequent wells in these land sections and under the same terms.

In the Company of Giants

Other areas of northeastern BC have proved within the last few decades that this is a very geologically fertile territory for world-class Slave Point formation discoveries. Notably, they include such multi-billion-dollar finds as the Clarke Lake, Adsett, Cranberry, and Hamburg pools.

 

Of equal significance, the region is far from tapped-out. Especially since many important recent drill successes in this region have been attributed to the effective use of technological breakthroughs in 3-D seismic technology, as well as new and innovative well completion and production technologies.

 

For instance, the prolific Ladyfern field wasn't discovered until as recently as 2000. Ladyfern has estimated recoverable reserves of between 750 BCF and one trillion cubic feet of gas.  Moreover, a single Ladyfern well can flow as much as 100 million cubic feet of gas per day. 

 

By way of illustrating the 'big picture,' the half-century-old Clarke Lake Field alone has produced a staggering 1.65 trillion cubic feet of gas to date. In fact, the potential pay zone formation that is being targeted at the upper Slave Point horizon is geologically very comparable to the Clarke Lake Field.   

 

Meanwhile, the target at the lower Slave Point horizon is stratigraphically equivalent to the nearby Adsett Field. This is where 91.5 BCF of gas has to date been produced from four Slave Point pools.

 

Notably, three additional secondary (smaller) natural gas targets have been identified, including the Halfway, Debolt, and Banff formations – all of which overlie one another like layers of a cake at much shallower horizons. A further secondary target, the Sulfphur Point, is at the well's basement depth, a little deeper than the Slave Point targets.

 

As we will discuss later on, Wyn and its partners in the adjacent Bougie/Trutch area have already unlocked the secret to tapping into at least one of these rich secondary pay zones. In fact, Wyn is involved in an entirely new Halfway reef formation discovery pool.

 

Meanwhile, the nearby, well-established Tommy Lakes natural gas field has already made a success story out of Focus Energy Trust – Wyn's senior partner in this new reservoir discovery.  In fact, Focus now boasts a billion-dollar-plus market capitalization and in excess of 125 producing Halfway wells at Tommy Lakes. 

 

On another particularly encouraging note, a 1967 test well drilled a short distance to the southeast of the Prophet River property flow tested at three million cubic feet of gas per day from a Halfway formation. Similarly, a second nearby well flow tested nine million cubic feet of gas per day in 1981. Both wells were never commercialized as cyclically low prices for natural gas back then made the construction of a pipeline gathering system prohibitively expensive.  

 

However, we are now in a buoyant era for natural gas prices. And the Prophet River well location is only about 10 kilometres west of the Alaska Highway in an area with excellent infrastructure, including the close proximity of pipelines. This now makes the economics of this potentially headline-grabbling drill project all the more robust.

 

Teaming Up With Focus Energy Trust: Success Breeds Success

Wyn is in the process of shrewdly implementing a cost-efficient, low-risk and highly enterprising business model that is already enjoying early-stage success. It even allows Wyn to protect the interests of shareholders by mitigating risk while at the same time building intrinsic value into the Company’s share price.

 

By way of explanation, this new source of exponential cash flow growth is the legacy of a 2005 deep drill project in which Wyn participated, namely the Bougie/Trutch project. Located a few kilometres to the southwest of the Prophet River project, this earlier venture allowed Wyn to inherit a working/participating relationship with the mid-sized natural gas producer, Focus Energy Trust. This is with regards to the drilling of shallow Halfway natural gas wells within the Bougie/Trutch land sections.

 

This high-flying organization has in fact built an enviable reputation for single-handedly developing a shallow conventional natural gas field at the Halfway horizon, known as the Tommy Lakes Field. In a little over a decade, Focus has to date produced 157 BCF of gas with estimated reserves of exceeding 400 BCF of gas. And at least 125 wells are now in production.

 

Now that Wyn has teamed up with Focus, excellent opportunities are beginning to unfold as planned.  In the early going, the partners successfully drilled and completed two wells a few  kilometers to the northwest of the Tommy Lakes Field during the winter of 2005/2006 – wells that have revealed an entirely new field that demonstrates prolific untapped potential. Wyn’s working interest in at least 12 land sections that encompass this new field or reservoir is 15%.

 

Located at a depth of about 1,000 to 1,400 metres, these shallow Halfway zones represent a projected payout of approximately 500,000 cubic feet of gas per day per well. One of the initial two wells is already being readied for production, which is expected to commence this winter.

 

Meanwhile, at least two more low-risk, offset wells are expected to be drilled in the coming months – when frozen-over ground presents ideal conditions for drilling. In turn, these new wells are also expected to be tied-in to Focus’ pipeline gathering system by March of 2007.

 

Of particular note, Focus has demonstrated a remarkably high success rate for the commercial development of dozens of wells in the neighbourhood of these Bougie/Trutch leases. Moreover, the natural gas fields in the Peace River region have historically generated high deliverability per well and high cash flow per barrel of oil equivalent per day (boepd).

 

Another major logistical consideration is the fact that Focus has plenty of infrastructure in place, including pipeline gathering systems into which any new wells can cost-efficiently be tied-in.

 

The partners have even had the foresight to acquire as much as 15 square miles of prospective natural gas leases adjoining the south and southeast portions of the Bougie/Trutch land package. These new land sections have also exhibited considerable potential for other successes involving both shallow and deep targets – which have been revealed by way of 3-D seismic survey findings.

 

These leases also offer a strategically valuable corridor to connect present and future Halfway wells with Focus’ main pipeline complex a few kilometers to the southwest of the main Bougie/Trutch project area.  

 

In terms of the ‘big picture’, the prospect of a steady and meaningful infusion of drill-bit-generated cash flow should also provide the financial springboard to fund Wyn’s other future high-impact drill projects.

 

All told, Wyn is in the enviable position of participating over the next several years in up to four dozen additional contingent, low-risk, offset Halfway drill prospects. Ones that are strategically located on the partners’ contiguous (adjoining) leases in what constitutes a virgin natural gas field, as well as at Prophet River. Typically, such low risk drill targets are selected on the basis of being geologically analogous to other successful nearby Halfway wells.

 

The Bougie/Trutch Slave Point Target Revisited?

Wyn's first foray into the high-stakes arena of high-impact drill projects took place at the Bougie/Trutch Slave Point well in northeastern BC – in close proximity to Wyn’s  subsequent drill projects. With Shell Canada acting as the Bougie/Trutch project operator and senior partner, Wyn had high hopes.

 

All appeared to go according to plan at first as the $8-million-plus well successfully reached its target depth of 3,300 metres – a Slave Point formation target. Furthermore, several prospective pay zones, such as a Halfway horizon, were encountered on the way down to the ‘company maker’ ultimate target. But the big prize ended up proving too elusive that time around.

 

Technical difficulties were cited by Shell Canada for the well’s abandonment. However, Shell Canada’s decision to remain tight-lipped about what went wrong and what also went right with the various secondary potential pay zones encountered left countless shareholders confused and disappointed.

 

In fact, most of them vented their frustrations by unceremoniously dumping their share holdings and moving on. This left Wyn’s market capitalization unreasonably beat-up for a protracted period of time – a situation that has yet to be rectified. 

 

However, Wyn still retains a 15% working interest in 26 square miles or sections of the Bougie/Trutch area. The Company has earned 12 square miles in all zones from the surface to above the Slave Point target, as well as 26 miles in all zones from the top of the Slave Point to the well's basement.

 

In other words, in the advent that a huge column of natural gas at this Slave Point target is finally encountered, then Wyn is assured that the partners will own at least the lion's share of this epic hydrocarbon structure. This is a strategically wise move as the lateral parameters of this natural gas reef (formation) target are still unknown and may yet extend outside of the margins of these 26 square miles.

 

Shell Canada subsequently lost interest in the Bougie/Trutch project. But the deep-pocketed ‘elephant hunter’ may still yet elect to exercise its first right of refusal to participate in the next drill program. This is because the drill logs from the original drill program has now been extensively re-evaluated and re-interpreted, as well as the 3-D seismic data. But this time, Wyn will play a much more influential roll in how the project will be managed.

 

Hence, they are now confident that their findings warrant a second drilling attempt. This will likely get underway during a period with advantageous exploration credits and government royalty holidays. It will surely be watched with envy by many other industry players.

 

This is particularly the case now that Wyn and its partners are firmly in the driver’s seat in terms of managing/operating the project, as well as the flow of news. This should prove a major shot-in-the-arm for investors who regard the timely dissemination of news to be crucial to running an orderly market.

 

SmallCapMedia agrees with this viewpoint and believes that this time around Wyn will not be hampered by all the hype and unfounded rumours that played havoc with its share price during the original drill program.

 

Investment Summary

From a technical perspective, Wyn has approximately 65.9 million shares outstanding (about 77.8 million shares fully diluted). Hence, investors (especially institutional players) who depend on high volume liquidity for effective buy/sell order executions are well served by this share structure.

 

In terms of Wyn’s image in the investment sector, its share price remains considerably undervalued at this time due to a couple of key factors. First, the stock has never fully recovered from the fallout that resulted from the disappointingly ambiguous outcome to Wyn's first shot at a world-class natural gas target about 18 months ago.

 

Second, the somewhat secretive nature of natural gas exploration and development has had the effect of constraining news flow over the last 18 months or so. Accordingly, the Company's compressed market valuation has yet to reflect the impressive headway that Wyn and Focus Energy Trust are making with their Halfway natural gas field discovery at Bougie/Trutch.

 

However, the near-term advent of the commercialization of the first several Halfway wells should go a long way towards building more realistic valuations into Wyn’s over-sold share price.   

 

In fact, up to four dozen or more Halfway wells may eventually come on-stream at Wyn’s various jointly-held Peace River land holdings. Most of which are now considered low-risk, contingent drill prospects that benefit from geology that is favourably comparable to known Halfway discovery pay zones.

 

This all promises to translate into a multi-million dollar monthly revenue stream – one that should propel Wyn to significantly higher share price multiples over the next several years.  

 

Furthermore, Wyn’s share price may yet experience a dramatic near-term, news-driven breakout by way of the Company’s participation in the Prophet River and Bougie/Trutch Slave Point ‘blue sky’ exploration plays.

 

A positive outcome to either of these world-class opportunities would surely provide patient shareholders with outstanding returns on their investments. Such opportunities are exceptionally rare. Thus, SmallCapMedia believes that Wyn’s shareholders benefit immeasurably from an enterprising, high-octane growth formula.

 

In fact, we believe that Wyn is primed for very exciting developments in the coming months and a banner year in 2007. We will therefore be watching the Company’s rising star very closely.