Jim buddy, THESE ARE the good 'ol days! This time its for the E&P companies that are heavily weighted toward NG production.
Also, this time the rising tide will _not lift all boats, IMO. Stock selection is going to be key, to find those companies that: 1) have shown that they know how to find gas and remain rich in additional prospects, or 2) were lucky enough to have bought a ton of gas reserves in the past and somehow have survived this last downswing in gas prices without having to hedge too much of their production for next year at prices that are currently way below market.
I'd like to invite some discussion of companies fitting either of the above categories. I will start by mentioning, for #1, Carrizo Oil & Gas, (CRZO), which I have discussed previously, and Energy Partners Limited (EPL). About a year ago EPL bought a privately held company called Hall-Houston Oil, and their main man, Gary Hall, appears to be a true superstar at finding hydrocarbons in the GOM shelf. By any chance have you heard of them? EPL laid low for the first half of '02 to absorb the acquisition, but now that NG prices have gone up they are going idiotic drilling holes, with tremendous success. Recently they had NINE rigs going in the GOM, probably more than any other independent.
For #2, I would nominate Koll's old friend KCS Energy (KCS). They produce about 20 BCF of gas a year (net of the gas dedicated to their production payment liability), none of which is presently hedged after this month. They are getting a new financing some time in the next 3 weeks, at which time they will likely be required to hedge a significant amount of production, probably for several years. If I believe weather prognosticators such as quehubo, by the time they set the hedge the 12-month strip could be $5 for chrissakes! Koll, whadya think here buddy, are you loading up on KCS?
Does anyone else have any other good NG commodity price plays in the E&P sector? Note that my 2 largest positions, CPE and ATPG, are not commodity price plays (although they both obviously benefit significantly from higher NG prices). This is because when I was building these positions (Oct./Nov.) I was worried that we'd have a warm winter because of El Nino. Now they tell us we're having a _cold winter because of El Nino. Go figure! |
