Intelledgement, L.L.C.

Good week for The Kennel, up $37 thousand dollars and still ahead of all three major indices plus the Marketocracy 100 since inception.

New stocks added: CDE. Coeur D'Alene Mines (CDE) is a $1.5B USA-based exploration and mining company with holdings in the Argentina, Bolivia, Chile, and the United States. CDE is actually our favorite mining stock and we have been chasing it trying to get in at a technically reasonable price for a few weeks now. While they lost money last year, losses narrowed on decreased production costs and higher silver and gold prices, and we really like the potential of their properties. We bought in at $7.05 (including commission) and the stock closed the week at $7.41, so up 5% in just a few days, we are happy so far. LOL We are also still looking to add NXG in the mining sector.

Stocks sold: None. However, we may still sell some non-E&P/non-mining stocks to increase our cash position.

Significant news last week:

The week got an early start as CanArgo Energy Corp (GUSH) released "preliminary" 2003 results Sunday night. The company lost $7MM on $8MM in revenue. On the face of it this sounds bad, but most of the loss was comprised of two non-cash charges, one of $4.1MM related to the company's cessation of their operations in the Ukraine and another $1.4MM charge for impairment of assets. GUSH decided late in 2003 to cut their losses in the Ukraine and concentrate on Georgia, and that decision appears to be paying off. Oil and gas sales revenues were up 89% in 2003 and oil production was up 142%. In addition to their Ninotsminda field from which most of this production was drawn (as reported in last week's "Kennel Rations", reserves at Ninotsminda have just been recalculated to be 63% higher), GUSH has three other promising exploration projects underway in Georgia, including their recently acquired interest in the Samgori field (already under production but with more exploration called for as well), Manavi (currently delayed after production tubing in the M11 well collapsed under pressure) and Norio. "CanArgo continues to be the most active exploration and production company in Georgia, having produced two-thirds of Georgia's oil production in 2003, and we have recently received the full support of the new Georgian government for our ongoing operations and future plans," CEO Dr. David Robson, was quoted as saying in the press release. GUSH closed the week at $1.13, up 15 cents.

On Monday, there was very interesting news from FX Energy (FXEN). First of all, it became evident that the legendary North Sea oil explorer, Richard Hardman, is a more than just window dressing on the board of directors. The Warren Buffet-owned CalEnergy whom FXEN has partnered with in Poland on their recent Zaniemysl-3 discovery had requested six months or more for technical evaluation before committing to the next exploration project. But per Hardman's active advice, the company has now decided to go ahead with exploration working in concert with the Polish Oil and Gas Company (POGC). FXEN and POGC will be selecting a second site in the Fences I area (where Zaniemysl-3 is situated) later this month; they have already identified a site in the Fences II area for drilling. Consequently - and this is the second notable development -- while FXEN and CalEnergy will continue to work together on the development of Zaniemysl-3 (and evenly split their 49% share of the proceeds), FXEN will be entitled to the entire 49% on these new wells. (POGC gets 51% on everything.) Hardman stated, "I believe the acreage along the southern portion of Fences I is some of the most highly prospective that FX Energy has in Poland. This is a wonderful opportunity to secure our 49% interest in an area that has the potential for perhaps a trillion cubic feet or more -- and at a relatively small cost. The Rusocin and Sroda prospects are, in my opinion, ready to drill. While one could spend significant time and funds further analyzing Rusocin, and Sroda, the incremental reduction in risk in my opinion is not worth the cost versus what we can learn from drilling the wells." While the potential payoff is greater, undertaking more risk than Warren Buffett preferred apparently gave The Street pause and FXEN closed Friday at $9.16, down $10.45 on the week.

Tuesday brought word from Abraxas Petroleum Corp. (ABP) of a modest increase in proven oil and natural gas reserves to 121.1 billion cubic feet equivalent at the end of 2003, up from 112.5 Bcfe a year earlier. Reserves represent 218% of their production >from development in 2003. Reserves were replaced at a cost of $1.15 per thousand cubic feet equivalent, based on 2003 capital spending of $18.3MM. ABP stock experienced a modest increase to $2.87 at the end of the week, up from $2.67 a week earlier.

On Wednesday, Internap Network Services (IIP) announced the completion of their secondary offering, which totaled 40MM shares priced at $1.50 each. With the market price of the stock around $1.90, to no one's surprize the underwriter SG Cowen exercised their option to snap up another five million shares making the company's take about $57MM. There was some message board grumbling at the low pricing of the offering, which resulted in a huge windfall for the underwriters and new shareholders to the apparent detriment of IIP. But the company ended the day not only with full coffers but also with high technical praise from the Gartner Group. The well-respected IT research and analysis company named IIP as one of the top five business internet service providers in the USA, noting "Internap has aggressively entered the performance management space by acquiring two intelligent router-control vendors, netVmg and Sockeye, and is expected to begin to offer a portfolio of end-to-end performance-management solutions, building on its foundation of excellent SLAs and good customer service." IIP exited the week at $1.94, six cents higher than where they entered it.

There was more financing news on Thursday, when DOR BioPharma (DOR) announced a $3.25MM private placement of 4.1MM shares (79 cents a share). The purchasers also received 1.6MM warrants each good for the purchase of an additional share at 87 cents for five years, with an accelerated expiration provision if the stock gets above $1.74. Management stated that the funds should carry the company "well into 2005". Apparently The Street was happy with the arrangement as DOR ended the week at 94 cents, up five cents.

Finally after the close of the market on Friday, HyperDynamics (HYPD) revealed some preliminary findings from the ongoing analysis of seismic data from their concession off the west coast of Africa. The press release quoted Neil Moore, the president of HYPD's geophysical data services subsidiary, as saying, "the latest processed data confirms that numerous surface seeps over the concession have not only created physical anomalies on the sea floor, but show conditions that indicate there are gas plumes in the water. We believe this is indicative of the presence of hydrocarbons." HYPD will need to partner with a larger company to perform any drilling operations; obviously the more promising the data, the stronger HYPD's hand in any such negotiations. Thus what has been a steady drumbeat of such announcements is likely to continue, assuming the data do not turn sour. The stock ended Friday at $1.98, up seven cents on the week.

Looking ahead, on Tuesday morning at 10am ABP holds their 4Q03 conference call (results will be released after the market close on Monday). For details on access to that conference call as well as other forthcoming events, refer to The Kennel calendar: ( groups.yahoo.com/group/The-Kennel/cal ).

A summary spreadsheet detailing The Kennel's current holdings including our cash position is available on this website: ( groups.yahoo.com/group/The-Kennel/files/The%20Kennel%20Snapshots/ ).