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

To: Tommaso who wrote (81971)	12/18/2000 1:04:45 PM
From: Think4Yourself	Read Replies (3) \| Respond to of 95453

I agree about the future of NG. It will be at least a year before this mess stabilizes. To that end I spent much of the weekend looking at ways to profit from the situation. In particular I was looking for all the unhedged California NG producers I could find as those guys will report spectacular earnings. Found three companies and have been buying them all morning for 1 year holds. Two are illiquid (and should not be agressively chased) and one is liquid. Here they are and what I found so attractive about them. DNR is near a 52 week high, so why would anyone buy it? The hedges! During 2000 the company had collars on 19% of oil production with a ceiling of $18.05, and collars on 78% of NG production with a ceiling of $2.58. These hedges expire 12/31/00. For 2001 and 2002 the company was much smarter. They only bought floors (no ceilings) . They get at least $22 for oil and at least $2.80 on NG for 75% of anticipated production (which includes the recent acquisition (see below)). They are GUARANTEED higher revenues going forward, even if the oil and NG markets collapse (not likely!). If markets stay at these high levels they clean up big time. The company also recently acquired 18 mmcfd of NG production at a very attractive price. ROYL is a play on California's problems. ROYL typically does not hedge more than a month in advance. They recently hedged 70% of December production at $14+. This one decision of hedging 23% of their quarterly production gives them considerably more revenue than they had in the entire prior quarter (which was very good for them). My thanks to the poster who brought this up last week. OXY is a play on value. OXY has California production, has a very low PE, and a decent dividend. Part of OXY's problems stem from their Colombian operations. The pipeline that keeps getting blown up down there involves OXY. Even though Colombian operations are a small percent of their revenue it does reflect negatively on them. They also have been accused of involvement with human rights violaters. Some funds/institutions won't touch them as a result. Stock is ridiculously underpriced and probably the best value in it's class.