AM 1150 Kelowna - Radio Rallies & Reversals

Continuing my discussion from this morning on natural gas, Bustin and Katusa draw attention to the oil-to-gas equivalent ratio, which has traditionally been around 6:1. At current spot prices, many analysts and promoters are saying gas is cheap relative to oil. Now a lot of oil companies are purchasing gas companies because lower gas prices have made the companies cheap. The oil companies then look to boost the reserves on their balance sheets by reflecting the gas they acquire as BOE's, or barrels of oil equivalence. They will then book it as a barrel of oil to analysts at a ratio that is something like 22:1. If a company says it has a billion barrels of oil equivalent in the ground, it will command a much higher price than if it showed its actual oil reserves and that it also had some gas reserves. Katusa then asks the question: "Imagine the implication to shareholders if this con is exposed for what it is?"