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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Dennis Roth who wrote (38621)	1/20/2005 7:21:42 PM
From: Bearcatbob	Read Replies (1) of 206092

Sometimes a blind Squirel finds an acorn - fortunately long ago and far away I found a DRIP in Questar! QUESTAR SEEMS THE MOST UNDERVALUED, IN OUR VIEW With an E&P mid-cycle return of 13.7%, we believe Questar is the most attractive of the unconventional gas companies at present. We estimate Questar's E&P business trades at 1.00X mid-cycle EV/GCI, assuming about a 7.8X EV/EBITDA multiple for the company's midstream and regulated businesses. While Questar shares have increased in the past four months, we see continued positive production growth and free cash flow from the Pinedale Anticline. We believe that Questar's E&P business should be valued at a slightly lower level for a given return versus its peers, considering the likely lower probability of strategic partnership potential due to Questar's strong regulated presence. Nevertheless, the company's regulated businesses provide a sustainable free cash flow, which can be deployed towards dividends or further investment in the high-returning Pinedale. We see 4% upside to a $51 estimated mid-cycle value and 24% upside to a $61 estimated peak value versus 17% downside to a $41 estimated trough value.

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