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

To: r.edwards who wrote (46636)	6/18/1999 11:30:00 AM
From: Razorbak	Respond to of 95453

Yeah, yeah, yeah. We've been hearing that spam from you for almost two weeks now. Question: How come Mr. Market doesn't seem to be a believer? quote.yahoo.com

To: r.edwards who wrote (46636)	6/20/1999 4:21:00 AM
From: dfloydr	Read Replies (2) \| Respond to of 95453

I called Bill Baumgartner, CFO at MEXP Friday. He helped me sort out some details. 1. Have I missed any recent news? I see nothing since the last earnings report. Ans: That is right, we have had no press releases since the last earnings report. 2. Gas Price Hedging: What is your plan and what percent of production is hedged at the $2.30 level? Is this limiting your opportunity if prices move on up? Ans: Analysts have been assuming MEXP would obtain around $2.00 for summer gas and around $2.30 for winter production. We have about 50% of our summer gas hedged at $2.30 and the rest is going for market prices which are now $2.30 plus. So far we have a lot less than 50% of our Nov - Mar production hedged at $2.65. 3. The matter of the bank line? Ans: The company is presently in compliance with our loan requirements. We expect to "reconsititute" our existing line at or near the old terms, or replace it with one of several other banks on those type of terms. We are not particularly concerned as we are in compliance and talking comfortably with our bank. 4. There have been many comments on various threads about the Miller family standing by to support MEXP: ie: with the matter of the bank line. Is this real? Ans: yes, the Millers own 40% of the company (and other insiders another 10%). They did step in and they bought some undeveloped property and leasehold interests to help company get into compliance after they year end write down. The company has the option to buy these assets back for the same price plus nominal interest. The Millers have no reason to cherry pick the company since they own so much of it. (Bill said that this transaction was in the latest 10-Q, but I could not find it in their May 14, 99 10Q - maybe it is in the previous 10Q). 5. The end of year mark down of oil and gas assets? Ans: Yes, we had to mark those down. We marked oil down to $8.90 / bbl of reserve and gas to $1.90 / mcf of reserve, hence the big write off. (I think he said they had had oil reserves on the books at around $12.90 and gas at $2.20 ... but that may be in their latest 10Q). This created a problem with your bank lines? Yes. And no, we can not now write them up now that prices are up. Financial reporting regs do not allow that. The only future benefit is that we will have somewhat lower future depletion charges than we might have had, and that will help a little but not much. 6. Will this reduce the amount banks will lend now or in the future? Ans: The banks are able look beyond the lower values on the balance sheet and take into account present higher oil prices. So no, I doubt the lowered values will have much or any effect. 7. Some commentators have reported problems with your drilling in the salt domes. Ans: we like what is going on there. We have drilled 31 wells. Yes, we have lost or blown a few, but on balance we think that program is going well. We've spent a lot on 3-D seismic and feel there is promise there. PS: I am long MEXP: a little longer now than before my call.