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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: excardog who wrote (5205)	12/17/2000 1:39:01 PM
From: Ed Ajootian	Read Replies (2) \| Respond to of 5504

excardog/Scott, Haven't worked up even a back-of-envelope enterprise value calc. on this one. First question is, how do you value the Colombian reserves? The only way they can produce them at a reasonable rate is if they extend the pipelines out to their own wells. As you say about Costa Rica, they don't have the coin to do that and that loan they had set up to do that seems to be falling apart since they can't meet the minimum covenants to be eligible to draw down any funds. On the NOL front, I would guess that most of the NOL's would be usable only against Colombian taxable income. Their drilling in the US has been much less than in Colombia. Also, there are tough tax limitations on the use of acquired NOL's in the US. Bottom line is, this is a "Hail Mary" O&G stock right now. That together with the fact that their production is 2/3rds oil says, why fiddle & diddle with this sort of stuff now, when we are in the best environment for natgas-producing companies in the history of the commodity? Alls I want is some nice boring "acquire & exploit" O&G microcaps, that are highly leveraged but whose production is not harmfully hedged, and I'll just sit back and wait for time to go by and let them pay off their debt over the next 3 - 4 months and, voila, the stock price will have doubled (i.e., the Panaco's of the world). No pain no strain --- and no exploration risk. When commodity prices are low, then I like to play with the Hail Mary stocks. Even if oil is $15/bbl., if you find a half a billion bbls. of it you're gonna do well. In the current commodity pricing environment the alternative prospects for investment profits on the commodity price play outweigh the exploration risks of going elephant hunting.