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: jim_p who wrote (82870)	12/27/2000 5:09:27 PM
From: ItsAllCyclical	Read Replies (1) of 95453

EEE selling at 20X cash flow? Fuzzy math... What #'s? That doesn't even look remotely accurate. As you know their hedges came off in Oct. They were hedged at $2. I don't think past # do much good when you consider hedges, acquisitions, drill bit gains etc. I definately appreciate all your work in the past on the E&P list you compile. It's a great starting point for research. But you can't call EEE expensive imho. Based on a conservative analysis of where other Canadian companies have sold for EEE will probably go for about $4.50 and it's selling for 2.60 now. See Danwilson Yorkshire's analysis on the Yahoo EEE board. Also Duke wants a sale done and many expect that $4 is the mininum bid...that was several months ago before we knew kind of winter we were going to get. In this new environment if EEE said they weren't for sale it'd probably shoot up to $4+ pretty quick. EEE analysis messages.yahoo.com Others have independantly come up with similar #'s. The situation in the NG markets is different than when the OSX was trading at 140 and oil was at $35. In hindsight that was obviously a profit taking scenario. OPEC wanted the price lower and the Gov had an SPR at their disposal for ST fixes. But with NG there is no quick fix and we have yet to see if we're going to have shortages across the nation. That said I only own the small caps. Currently in EEE, TXCO, TXLI, PNO and PRZ. At some point the large cap E&Ps will make good shorts, but given their fundamentals I won't be too quick to pull that short trigger. The bio-techs will have a number of lockups expire within 6 months. The street.com ran an article on it. It should be pretty safe to short the index in a couple months. Some of the financial may also be really good shorts if they continue to run ahead of Greenspan's cuts. In sum, there are enough opps to short that I don't have to risk shorting NG plays. Maybe in 1-2 years - if we see some decent production gains. There will be plenty of time to short imho. If not the large caps then the small or mid caps. Index comparisions do not do the NG sector justice of late. RRC, EPEX, CRK, MHR and many others are screaming. I think the lagging small caps will have a nice run in Jan. I have increased my exposure to these plays in the last week. Also before everyone gets too cocky about NG plays Slider has been proven right far more than wrong. I think he's ahead of the curve again, but it's good to be thinking like that so you can start picking your sell pts.

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