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

To: Tomas who wrote (64243)	4/11/2000 9:11:00 PM
From: BigBull	Read Replies (2) \| Respond to of 95453

Tomas re your China IEA post. The IEA and most professional analysts don't have clue what is going on with Chinese demand. I've tried to tell everyone that China is just now emerging from recession. The first and second month economic stats prove it. This news confirms in very real terms how that economic growth is translating into energy consumption. Unsustainable? Bosh! IMO the 200,000 bpd added consumption is probably very conservative. Lets call the IEA SHOCKED and STUNNED. This all took place during a period of much higher crude prices. The recent price drop just kicked in the Dragon's afterburners. Now if Japan starts to recover this qtr - uh oh.

To: Tomas who wrote (64243)	4/13/2000 5:24:00 PM
From: Tomas	Read Replies (1) \| Respond to of 95453

Oil patch still has some bargains. Some firms could be takeover targets The Globe & Mail, Thursday, April 13 MATHEW INGRAM Calgary -- With fear of a high-tech meltdown turning investors' attention back to so-called Old Economy plays, and a series of high-profile takeover bids under way in the oil patch, it's worth wondering what other industry players might make good takeover targets. The short answer is: almost anyone. Despite healthy gains recently, many oil and gas stocks continue to be undervalued relative to the kinds of cash flow they are producing. Not everyone is bouncing along the bottom, mind you. Suncor Energy, which over the past couple of years has tended to trade at a premium to the rest of the industry, continues to do so in spades: According to brokers surveyed by First Call/Thomson Financial, the company is trading at about 9.5 times its projected cash flow for this year. Most of the rest of the industry is trading for three to five times cash flow, despite strong commodity prices. Canadian Natural Resources, for example -- a large natural gas producer that became even larger last year with the purchase of $1-billion in assets from BP Amoco and $235-million from Blue Range Resources -- is expected to make almost $10 a share in cash flow this year. Its shares are trading for about $38. Suncor, meanwhile, is expected to make less than $7 a share in cash flow this year, but its stock is trading for $67. In other words, don't hold your breath waiting for someone to buy Suncor. Gulf Canada is another story. Although it has bounced off its lows, Gulf is only trading at three times its projected cash flow for this year, according to First Call. The company still has a fairly high debt level, but its ratings were just upgraded by Standard & Poor's, and Gulf recently got a favourable ruling from Alberta's oil industry regulator. The AEUB said a number of gas wells on Gulf's Surmount oil sands property will have to be shut down so that development of the land can proceed. But even Gulf doesn't look that cheap compared with Talisman Energy. Talisman, whose stock has been under pressure for months as a result of its controversial investment in Sudan, is trading for just 2.8 times the cash flow projections of most analysts. The company is expected to spin off a staggering $14 a share in cash this year, and yet its stock is still only at about the $41 level -- and that's an improvement from a few weeks ago. Senior producers like Talisman often trade at five or six times cash flow. Although the Sudan project has captured the market's attention, it only represents a fraction of the company's assets -- about 10 per cent. Any U.S. producer looking for more foreign exposure could snap up the company, whose market value is currently only $5.5-billion, compared with $7-billion at its peak, and sell the Sudan property to a foreign company that doesn't care about criticism from U.S.-based lobby groups. They would wind up getting Talisman's other assets at a substantial discount. Even further down in the bargain bin is Renaissance Energy, which has been struggling for the past year or so, losing widely respected chief executive officer Clayton Woitas and trying to change its focus. According to First Call, despite its strategic problems, most analysts expect the company to make $4.75 a share in cash flow this year -- and yet the stock is trading for about $13, for a multiple of about 2.5 times cash. Ranger Oil, which is the target of a somewhat optimistic $945-million takeover bid from tiny Petrobank Energy, also continues to bring up the rear as far as oil patch valuations go. Although the stock has jumped upward substantially since the Petrobank offer was made last week, at about $7 it is still trading at a relatively low multiple of three times its projected cash flow for this year. At its recent low of about $4.25, the veteran producer was selling for just 1.8 times its expected cash flow. The TSE oil and gas subindex has some other bargain-priced stocks: Cabre Exploration is currently selling for less than 2.5 times its projected cash flow, while Beau Canada trades for 2.8 times (activist investor CanFund has a significant stake in both companies). Crestar Energy -- which has been buying back its stock -- is trading at three times cash flow, as is Newport Petroleum (which effectively put itself up for sale last month), and Numac Energy is trading for about 3.2 times cash flow. Does this mean that some or all of these companies will be the subject of takeover offers in the near future? No. But it does mean that they are historically undervalued given the industry's currently strong fundamentals, and that if anyone is doing some bargain hunting, they are likely to look at some of these stocks first. globeandmail.com