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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Razorbak who wrote (45338)5/23/1999 10:32:00 PM
From: Robert T. Quasius  Read Replies (1) of 95453
 
I made a lot of money on KCS Energy several years ago.

Recently, I started looking at KCS again, but avoided it like the plague. I have been buying some battered small and microcap E&P companies lately, but with much better chances of survival than KCS. KCS is finished IMHO.

I take a hard look at whether these companies have made all their debt payments and remained cash flow positive or at least break even. The big ceiling test write-downs of some stocks stemming from extremely low commodity prices at year end 1998 are an accounting and tax anamoly that unfortunately triggers loan convenants for some small fry like MEXP. In cases like that, there can be some undervalued gems to be found. If the write-downs come for other reasons, or a company had substantial negative cash flow, then I tend to avoid them.
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