Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Roebear who wrote (50118)	8/31/1999 11:53:00 AM
From: SliderOnTheBlack	Read Replies (3) of 95453

RRC - meeting with Bank Group to review redetermination of credit facility... This is the reason for no volume - sellers, shorters, hedgers have done what they wanted to do positionwise. This is news - but, yet it is not news. They have the JV which will drop $100 M off the debt side - worst case scenario imho - is they get an extension throught the end of Sept targeted closing of the JV. The risk - is that the JV does not happen... not likely imho - but, no guarantee that it is impossible... Also, RRC has pre-packaged other non-core assets for sale - which is an additional source of cash should they need to pay down the line upon redetermination. They had .42 cents cash flow per share last quarter on the incredibly poor realization of $12.94 crude & $1.94 mcf nat gas. Folks - that is $1.68 cfps x 6-8 times = $10.08 to $13.44 per share valuation; presently supported using ONLY historically average multiples for both RRC and its peers - ''IF" they keep realizing $12.94 crude & $1.94 mcf gas ! - PS; last time I looked; present prices for both are approx 50% higher for both products ! --- this quite simply; is not that hard to figure out.... the bottom is here. It is ONLY a matter of ''when'' - not ''if'' RRC and the sector returns to these normal multiple valuations. Q3 will be the turn - that is when the Oil majors, the Integrateds and the independant E&P's will surprise to the upside, finally show substantial qtr over qtr and year over year increases and the market will finally reward them for this; as this is what they are waiting for... RRC remains the best fundamentally supported value in the Oilpatch imho - period. It's short position (mainly hedging) and its 40% retrace off of its high mere weeks ago; also makes this potentially the most rewarding short term play in the patch... only time will tell - but, there should be news soon.... the volume drying up is interesting indeed... more hedge funds & Institutional players in this one than people realize - the recent shorting was powerfull - but, that's the double edged sword the shorts have to live & die with...

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