Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Think4Yourself who wrote (52896)	10/13/1999 9:56:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

JQP TMR vs. MHR Now Lingerfelt.... using "Yahoo" ? for your estimates (VBG) ? C'Mon spend some $ get some accurate info man ... access the Deutsche Banks report available on Multex.com etc... Actually; as well all know, or should know; "EPS" is the least functional valuation metric for small cap e&p's. MHR is not in an "EPS" mode here. They've just made some highly leveraged and most importantly - "immediately accretive" acquisitions at the near exact bottom of the cycle. Paid just .73 mcfe for proven reserves... They literally via ONEOK's $50 Million infusion have one of the single most aggressive Nat Gas drilling programs starting here and into Q4. As far as cap ex spending for drilling to market cap - No other company has leveraged this level of drilling, exploitation & exploration right here. Just made 3 hits of the first 5 wells drilled in the GOM. "GROWTH" is the story here. Company should grow production by 30% this year and 25% next year; this in an environment of much declining production from the larger names, or 3-7% growth in the smaller caps. Cash flow per share (along with production growth - this is MHR"s primary valuation driver)has tipled from last year and will nearly double next year. .20 in 1998, est of .66 for 1999 and est for $1.11 for 2000. The other factor that separates MHR from other small caps - even those in the growth mode; is their partner ONEOK; they are both openly pursuing other acquisitions and with ONEOK's capitalization; the story is only beginning. Unlike the "MEXP's, or CRK's" of the world; this is not just an undervalued, oversold play; - totally the opposite of MEXP & even CRK - who has had declining production of late. This is the one company that is most leveraging their Cap Ex spending as a percentage of market cap to drilling, right here and right now. Company will be about 66% Nat Gas & 34% Crude Oil by next year. More balanced production presently; but with crude prices - that's a positive as well. Fundamentally company is valued .61% of NAV of $4.96 per share. Additionally; they have one of the longest lived reserve bases; at 12.9 years which allows a higer debt ratio to be carried. A very sharp valuation metric that I like to use is ; Debt & Reserve Life - adjusted cash flow multiples. Using 2000 multiples; MHR is along with their NAV multiple among the cheapest in their sector. CFPS multiple is also very cheap. In addition with their GOM drilling program; they like ROIL (whom I also like) have some real upside drilling projects that can impact the company pretty substantially to the upside. Bottomline: With the capital available from partner ONEOK; their is literally no capitalization risk and they remain a strong acquirer here. Growth - leader in production growth & cash flow growth; that is hugely leverage in Q4 & Q1 coming up here. This production & drilling leverage; given the overall sector selloff makes this one of the best plays I see. No other company that I see has this high of impact coming in the next 2-3 qtrs... Certainly a reasonable expectation of a bounce back to $4 in the short term (+33%) and with cfps, production growth and their drilling... the realistic, if not expected break out to new highs in 1-2 reporting qtrs is realistic as well. It's a "double" to Deutsche Banks - "Strong Buy" price target of $6. hardly an unrealistic price... ONEOK - one of the largest Nat Gas players in the US is their equity parter; Look for these type so relationships going forward. This is the wave of the future... ala ~ RRC & First Energy; EOG & BEXP, PGEI's new partner Inter Mountain Industries etc, among others. This will give these small cap companies sitting on "cherry" exploration plays; the capitalization to leverage production & exploration & drilling. JQP - no real problem with TMR, it is not undervalued on many valuation metrics and many think at $5 it is "fairly" valued and not at all undervalued... just my imho; certainly not a bad call in ANY way, just not my cup of tea... MHR links: biz.yahoo.com Nothing to hype here folks; an industry partner to ONEOK is not a hype story... simply a huge growth story; in its infancy and in an anomaly price to growth phase thanks to the sector selloff here... do the "DD" - certainly a real nice short term trader; and not a bad long term keeper. EVER is cheap again here... $18-19 vs. $28ish recently; with their cost structure and growth ???? - gotta be in the long term drawer, also look into MLRC for a story similar in growth, being a nat gas pure play; with a new equity infusion... good luck