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

To: Ditchdigger who wrote (69082)	7/2/2000 8:38:40 PM
From: Ditchdigger	Read Replies (2) \| Respond to of 95453

Damn, got to love this SI upgrade<LOL>. Pretty soon they will upgrade themselves into the crapper..Sorry for the mulitple posts,,be careful with that edit button<lol!!>

To: Ditchdigger who wrote (69082)	7/3/2000 6:42:47 AM
From: chowder	Read Replies (1) \| Respond to of 95453

Hello Ditchdigger!.....Regarding EEE So, you used to live in SC, eh? I'm in Columbia. I came down here from Boston. Here's a little history on EEE and the status of their hedging program. Last year was a bad year for EEE. There were three things that caused EEE's poor performance last year, but what impacted the share price the most, had to do with proven reserves. In the latter part of 1998, an independent engineering consulting firm assigned 352 BCF of proved reserves. In 1999 the proved reserves suffered a negative revision down to 155 BCF, (ouch! ). The company stated it was largely a function of deliverability difficulties. ( Yeah right! ). Anyway, the man in charge at that time has been replaced by someone who is well respected and comes from Duke Energy. Duke is a top notch company! The new CEO says that improving the deliverability on this property is their highest priority. The hedging program has been a real problem for EEE. First off, EEE did not benefit from the run up in NG prices, they were hedged at an average cost $2.36. Furthermore, EEE was unable to meet their hedge commitments and had to purchase NG on the open market at the higher prices. A double whammy, if you will. Finally, EEE's Crown royalty payments were linked to market prices, not hedged prices, and therefore their royalty payments continued to climb while they continued to lose money. EEE has taken some very positive steps to putting 1999 behind them. Duke Energy now owns 20% of EEE and Duke's man gets to call the shots. Duke Energy is a very well run company and I'm excited to see that they will have some input into EEE. EEE is also spreading the risk of drilling wells. They have 50% partnerships with companies like Kerr-McGee. Kerr-McGee is expected to run EEE's deepwater explorations. This looks very encouraging to me. When the hedges come off in October, most of the cash flow will be added to EEE's bottom line and best of all, most of the old management has been replaced. Actually, EEE's hedging program isn't as bad as everyone thinks. The average investor doesn't realize that EEE recently neutralized more than half of the fixed price hedge by swapping 46 mmcf per day into index pricing to take advantage of any rise in summer gas prices. According to the company's latest annual report, this strategy is already benefitting the company. If this is true, EEE should start performing prior to November. dabum