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Gold/Mining/Energy : Oil & Gas Price Economics
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To: MskiHntr who wrote (15)12/13/1998 9:17:00 PM
From: Ed Ajootian  Read Replies (2) of 350
 
Joe,

IMO this is not a good market to try to trade on the consolidation play. The O&G equity market is so weak that Buyer doesn't have to pay much in the way of buyout premiums to acquire Seller. Mobil got something like a 25% premium. This is not enough considering you would only guess right on about 1 out of 5 companies at best and who know how long you'll have to hang in there.

That being said, I feel that Chesapeake Energy (CHK) is a good possibility for a takeover. They basically put themselves in play last July, and no takers so far. But I feel that once we get by 12/31 and gas prices get whacked down to where CHK will be looking at another ceiling write-down, they will be anxious sellers. Right now I have a bit of their preferred stock. The good part about these shares is that you get paid dividends at the rate of 18% a year to wait.
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