Harken Energy Corporation (HEC) Message Board

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Gold/Mining/Energy : Harken Energy Corporation (HEC)

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To: Gary105 who wrote (5192)	12/10/2000 9:59:32 PM
From: Ed Ajootian	Read Replies (1) of 5504

Gary, Maybe the $2.50 was a bottom but I don't see a lot of upside from the current quote. It is now trading at just over 4 x cash flow and, with 2/3rds of its production being oil (vs. 1/3 gas), with oil prices tanking, and with no indication in their latest 10Q that they had any oil hedges in place at the date of filing, the prospects don't look too good for HEC right now. They have $90 M of debt and during 3Q (when they got an average of $30/bbl. for their oil in the US, $24 in Colombia) they generated cash flow at a rate of about $16 M a year. This high debt in relation to their cash flow does not leave a lot of margin for error. They say they have their domestic properties on the market but they would be very lucky to sell them for anything approaching their true current value. The market for O&G properties is not unlike the market for O&G equities right now -- buyers are in a state of shock re: the current futures prices and refuse to value properties on that basis, but rather are sticking to the old rules of thumb. Best of luck with HEC!

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