Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Douglas V. Fant who wrote (22182)	11/21/2002 7:51:02 PM
From: isopatch	Read Replies (2) of 36161

Doug. Ditto with some E&P valuations. Which is confirming of the positive divergence you're spot lighting. The larger E&Ps move first (generals leading the troops as the old W.S. saying goes) and some are selling at fairly high CF multiples. XTO is an outstanding mid cap and will go considerably higher before the heating season is over IMO. But it's selling at 6.3 x CF. Contrast that with some of the quality junior NG explorers that are only now finishing bottom formations which are prices at 3-4 X CF. PQUE is a good example that I'm comfortable mentioning as it has adequate volume to to facilitate entry and exit in size without unduly impacting the ST price behavior. Ddon't think it's a stretch to say that well before heating season ends, most of these micro/small caps will be priced to 5 X the higher operating cash flow implicit in the improving NG prices we've seen in recent weeks. Isopatch

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