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

To: Archie Meeties who wrote (76558)	10/17/2000 6:20:44 PM
From: Meridian	Respond to of 95453

Seems like the higher NPV well companies with the commensurate short reserve lives should merge with the long-lived, low NPV wells. Balance out the portfolio. Most of the smaller companies I follow, most notably Edge Petroleum, fall into the former catagory with good near-term cash flow, but no visibility. I've got to think that the longer-lived reserve companies in search of near-term cash flow will begin acquiring them. I mean, Hell, Edge is trading at something like 2-3X 2001 cash flow! But they also have a reserve life that runs out within 3-4 years.

To: Archie Meeties who wrote (76558)	10/17/2000 7:48:31 PM
From: jim_p	Respond to of 95453

Archimedes, You are right about value of long lived production vs. short lived production. Most investors don't understand the difference. A lot of people should remember the games played by CHK with short lived production during the last cycle, and how high there stock went only to crash back down harder then most. The problem is even with longed lived production you get as much as 1/3 of the total reserves out of the well in the first 12-18 months. The other 2/3 may come out over a period of 10 years at a declining rate of depletion. The other factor is the time lag to bring new production to market. In offshore fields, it can take over a year before new flush production comes to market. There is no question we are in a period of increased demand for NG, but don't think just because demand is higher than in prior cycles that we will not continue to have periods of over production. We will, and they will be sooner than later as they have always been in past cycles. Jim