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

To: Think4Yourself who wrote (47084)	6/30/1999 10:14:00 AM
From: patim	Read Replies (3) \| Respond to of 95453

What are your favorites E & P's right now? Thanks.

To: Think4Yourself who wrote (47084)	6/30/1999 3:46:00 PM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 95453

Lingerfelt: << This logic is SO simple that it is easy to miss.>> Bingo. ...exactly; do not underestimate those who are stepping up cap ex spending here - dayrates at 1/2 of where they were last year. These E&P's are getting the drilling done at 50% off from last years prices - (drilling is often halfof total project cost) and they are getting higher Crude & Nat Gas prices simultaneously. ... my .02 cents on CRK - you asked before Ken, why I liked them. They just did a senior note offereing due 2007 - and a private placement of pref stock; paying off bank debt - reducing debt to book cap to 66% from 72% - not great, but better and not nightmarish. They have leveraged heavilly into a position to step up production, do some acquisitions and to be very, very, very leveraged into ''possibly'' one of the great short term Nat Gas plays in decades... any Gas ''crisis'' is just gravy however; this is a double immediately when the hedging comes off. They have another $50 Million available in their Bank credit line for further acquisitions - and are talking about increasing their planned 1999 cap ex spending from $15 Million to $30-40 Million ! - they will - bank on it. They popped to $5 off of the new liquidity news initially - and then had some selling due to the news that a substantial portion of their production was being hedged/collared below current market prices untill the end of Oct. When they turn on the cap ex spending and factoring in a hot streak of a recent 80% drilling success rate - their cfps will move to almost $2 this year and $2.25 for 2000; at a conservative 5 x cash flow = $10 by xmas and $12ish next year. This is without any type of a nat gas spike this fall...calculated at only 2.22 mcf. also, their ''fair market net value'' by CIBC for example is $8.86 - with LOTS of drillbit upside and a stepped up cap ex program looming. normal peer group cfps valuation is 4-9 x cfps... CRK has some drillbit upside, has solved liquidity concerns, is stepping up production directly into the sweet spot of gas prices and their comp's of qtr to qtr/year to year will fly when their hedging comes off.... the easiest double in the patch imho. I like OEI also - still 1/2 off of its 52 week high; they are deleveraging off of the SGO merger and have huge global exploration upside. Short term - an unknown company to many; HSE - has as much cfps leverage upside to rising nat gas prices - I see low $20's by XMAS etc. - UPR is a fundie fav and will move, XTO still has room to go, NBL is a gas play that has lagged peer BR - and will get fundie action soon , merely as a laggard for those that like larger cap names. I'm huge into CRK, with HSE my next largest holding, then XTO, UPR, and MEXP, PGEI. I prefer to concentrate - 5-6 subsector stocks max. If CRK goes to $3ish - I make a portfolio bet against the street. I just got lucky - sold all RRC yesterday at $7 - which was a printed, price target for about 3 analysts - guess what - it sold off $1 today on profit taking right at $7 ! I guess we need to believe them when they set price targets... I put the $ into more RIG, missed DO; but got more CRK at $3 7/16 intra-day... I'd think twice about not selling some stocks into strength here and into a further run up and rotating more heavilly into E&Ps with the $ - prior to OSX companies earnings reporting. With the tech sector rebounding and the nets taking back off - we are not going to get any rotation $ - I smell short covering here, a little mo - mo off of $19 oil; but still see a short led shakeout run when earnings start getting reported. ''THAT" will present some rea bargains imho - I''ll be laying in wait for RIG, DO and SII, CAM, WFT if they selloff. I think the word is out on the Street that they want one last big shakeout... and they ususally get what they want. It's heavy over-weighting to the E&P's for me, untill dayrates and storage #'s dictate otherwise. ...bottomline; OSX 120+ is just a matter of when ? - but, I don't see it untill those 2 magic #'s get hit; sub 320 M boe in storage & 150+ GOM rigs at work.