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: Crimson Ghost who wrote (55465)	11/26/1999 1:25:00 PM
From: SliderOnTheBlack	Read Replies (2) of 95453

GeorgeC; I think the story is that no one has realized much $26 crude here... all the analyst estimates & price targets are for $19-$20ish max per ABN AMRO's rising their crude # this am. Also; because of poor hedging by many; they are only now coming off of under the market hedges - the next qtr will be the first one showing the realizations of lots of $18+ crude Oil... there were lots of $14-16-17 hedges in place thru Q3 here of late. The "real" story; is that the $ actually realized by the E&P's for crude will be much higher with "unhedged" or positively hedged crude oil going forward. While crude was $26 - most Co's had it hedged at $16-$18. Now, going forward, they have it hedged at $20+ and will realize $18-$22 market prices which will STILL be much higher than they realized all this past year - again, because of poor, but necessary & prudent hedging. The peak imho; has yet to be reached... there will be big production increases and higher price realizations & cash flow in the coming qtrs... Nat Gas here is oversold; but the co's are priced & trading like gas will remain near $2... again, the flip side of hedging is that many nat gas players have the next 2-3 qtrs heavilly hedged at $2.75-$3 ! So, now they will receive the flip side of their prior poor hedging... TMR is now experiencing the downside to not having hedged nat gas; but is oversold here - the nat gas story for this winter is NOT over. Gutsy players could make a fortune buying NG futures here near $2 imho.... not my cup of tea; but tempting... I may do some research. If we get NG at $1.90 ish - I will find a way to play.

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