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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (46133)	6/10/1999 9:30:00 AM
From: Robert T. Quasius	Read Replies (1) \| Respond to of 95453

AXAS has had a lot of insider trading, yet is still very much beaten down. The most recent round of selling started when they announced some dry holes in Canada. However, these were high risk wildcat wells, and other wells in the same area might very well be successful. AXAS did experience some good successes in South Texas, but this has been virtually ignored. I feel this stock is largely misunderstood. They have a lot of debt on the books, but are a low cost efficient operator. Also has some excellent prospects, and management has a talent for sniffing out good bargains. Insiders have been heavy buyers at prices much higher than today's. Some other interesting aspects is that if you ignored book value and looked at proved reserves and assets, less debt, you would see about $16/share in intrinsic value. Book value is actually negative, reflecting many ceiling test write-downs, etc. IMHO, book value is not a good gauge of an oil and gas company's true worth. It's the reserves in the ground, stupid (no insult intended, just a pun). Cash flow from operations is also key, and I won't buy an oil and gas company with negative cash flow from operations. This stock was a $20 stock not too long ago, and IMHO will be a $20 stock again, for a ten bagger from current prices. No chance of BK here, unless we reenter a long period of depressed prices. AXAS managed better cash flow from operations ($7,776M) versus ($4,370M) during Q1 of 1999 compared to Q1 1998. During 1998, AXAS managed to make all debt payments, have positive cash flow from operations, and did not trigger any debt covenants. In fact, they recently managed another debt placement, and they have some working capital remaining. The debt is certainly something to keep an eye on, but IMHO will not be a problem. Also, keep in mind that a merger with another company with a lot of cash would unlock a lot of shareholder value.