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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: WWS who wrote (71499)8/23/2000 4:01:23 PM
From: que seria  Read Replies (1) of 95453
 
WWS: I said "relative valuations"; should have said relative
charts. I had just looked at how PCP and TLM have done this year, compared to Berkley. I had this in mind:

bigcharts.com

I think that gap will close unless Berkley is actually misstating what is has in production ready to come on line this year. No question PCP and TLM have better cash flow ratios, and thus proven value, than BKP. But I just can't look at their charts and want to buy in now. To buy right in this environment, you have to find something beaten down. Berkley's chart qualifies it. It is crucial that its properties and prospects haven't diminished; management just overpromised. The question is whether the negativity (such as today's "sell" recommendation) is now overdone in view of the large production Berkley reports is behind pipe and ready to flow in the second half.

BKP is a buy only for those who believe: (1) it has the wells ready to flow as it reports; (2) its cash flow will reflect that by year end and especially next year; (3) its valuation will change to reflect that; (4) it has excellent exploration and development prospects going forward; and (5) its recent quarterly implies the company now recognizes this isn't an environment in which to add hedges. This isn't a trading play, unless you want to bet on California exploration results near-term.

I also happen to strongly prefer North American gas production to distant oil production, but that's a sector and geopolitical call. What do you like?
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