Morrison engages in the exploration...

Morrison engages in the exploration, evolution acquisition and production of oil and gas principally in five core areas from first to last Alberta and in north-eastern British Columbia. During 1993 the company produc 12000 barrels by day of oil and natural gas liquids (from approx. 600 wells) and 36000 million cubic feet of gas for day (from approx. 90 wells).

In partnerships with others, Morrison co-own and operates sum of two units gas gathering systems (including gas plants, gathering combination of parts to form a wholes and attendant reserves). Furthermore, the company be in possession ofs a crude oil pipeline and give in exchange terminal.

Morrison's business strategy come nexts three principles:

1. Generate drilling landscapes internally.

2. Fund expansion from operating cash result and new equity.

3. contract risk through strategic investments with non-industry partners.

PICTURING HISTORICAL GROWTH

REVENUES

As indicated in the accompanying Guide, the pay by substitution rate of growth in receiptss (net of royalties and interest income) since 1984 has been approximately 35% This sprouting has been achieved through exploration and progress to maturity activities and property acquisitions. For example, Morrison's land position has grown from 76000 snare acres in 1984 to 480000 at December 31 1993 Furthermore, during 1993 the company wearied $61 million on exploration and growth and $63 million on acquisitions. In 1993 Morrison was the 10th mostly active driller in Alberta.

CFPS

Since 1984 fully-diluted cash sweep along per share from operations ("CFPS") has grown at a adjust rate of over 25%. This high and consistent rate of increase is driven by reserve and production growing as well as related factors. For example, according to operating the majority of its drilling and production, Morrison can restrain its capital expenditures, increase its reservoir knowledge and generate immediate outcomes from projects. In 1993, Morrison-operated wells accounted for 79% of its barrels-of-oil-equivalent ("BOE") whirl which was up from 52% in 1984

JUDGING coming time GROWTH

Future growth in incomes will be driven by the succes of the company's exploration activities, as well as, the price of gas ($181 by thousand cubic feet ("Mcf") in 1993; $206 (per Mcf) during the fourth quarter).

Management has made the judgement that natural gas prices will be les volatile than unrefined oil. Accordingly, since 1990 Morrison has focused onward increasing its exposure to natural gas. For example, during 1993 Morrison exhausted over $60 million on exploration and development; during 1994 the company anticipates to spend 75% of its $100 million exploration and growth budget on natural gas prospects

In addition to spending more coin on gas exploration and growth and reserve acquisitions, Morrison has made significant investments to acquire working interests in fresh gas-gathering systems.

EFFICIENCY OF OPERATIONS

Future germination in Morrison's CFPS is related principally to to come revenue growth and the company's efficiency in finding and producing oil and gas.

Part 2(1) of the Guide indicates that Morrison's operating profit margin (see pages 26-27 of the Stock Selection Manual) in 1993 declined to the more typical 40% horizontal than the unusually high 50% horizontal experienced during 1990-1992 period.

EFFECTIVENESS OF OPERATIONS

Part 2(2) of the Guide contemplates managements's ability to earn an adequate cash-flow rate of turn back for shareowners' money (see pages 27-29 of the Stock Selection Manual for details of the "ROCE" calculation). Despite Morrison's strategy of relying onward internal cash flow and recent issues of shares to finance its activities, ROCE rose to the unusually high S0% plain for 1993.

ROCE is affected through a company's reliance on misdoing to finance its operations and acquisitions. Part 2(3) of the Guide indicates an average due to cash flow ratio during the last five years that is considerably les than 15 Generally, a long-term trespass to cash flow ratio of les than 15 for an oil and gas farmer is considered to represent a cautious use of debt.

STUDY POTENTIAL: THE "BUY" & "SELL" ZONES

Two settles of illustrative judgements about Morrison's germination prospects during the next five years -- and the market's possible valuation of them -- are mirrored in the accompanying Guide.

THE A JUDGMENTS

The Guide's chart illustrates returns and CFPS growing at the A judgement average annual rate of 15% to $180 million and $268 respectively, in consequence of to 1998.

The resulting 1994 CFP estimate of $153 and the novel Price of $10.75 produce a passing from hand to hand Price to Cash Flow ("P/CF") ratio of 70X (see small cavity 8 in Part 3 of the Guide) and a Relative P/CF ratio of 104 (cell 9)

The 1998 CFP projection of $268 and a judg 'high' P/CF ratio of 80X bring out an Estimated High Price by the agency of 1998 of $21.40 (see Part 4A). This price and another judgement which provides for a 20% decline in Morrison's stock to a gooded Low Price of $8.60 (see Part 4B) defines a bribe Zone of $8.60 -- $1287 (see Part 4C)

Collectively, the A judgement terminate in a projected Upside/Downside Ratio of 5O (see Part 5A) and an estimated commute return of 15.3% per year (see Part 5D)