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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (972)	3/5/2001 12:01:31 PM
From: Second_Titan	Respond to of 23153

Good trade with MDR , I made quite a bit with it exiting around $15, but rode it from ~8 - 12 and back several times so I was not confident on that one. As far as E&P's I reloaded CRK <$10 last week. But DVN seems like an unappreciated one that I was thinking of overloading on to ride this expected wave of buyers. I am holding PRZ OXY CRK FST VPI DVN as underappreciated plays. But if money is going to return in force it may just return to where it left from the leaders like APC APA etc. Another thought is maybe the next wave of interest will be towards oily plays like VPI instead of NG.

To: kodiak_bull who wrote (972)	3/5/2001 12:57:52 PM
From: Telemarker	Respond to of 23153

HECO: A valuation anomaly? Disclosure: I am presently long HECO shares. Hallwood Energy Corporation (NASDAQ:HECO) is a microcap ($90MM market cap), 86% natgas production weighted E&P with 66% insider ownership presently trading around $9.25/share. For Q3 '00, HECO reported diluted net income of $.70/share and cash flow of $1.36/share. This was achieved with average realized gas prices of $2.84/mcfg, owing to ornerous hedges currently in place and expiring through 2002 (covering approx. 56% of Q4 '00 production, 60% of '01 production and 33% of '02 production) For the 9 months ended 9/00, HECO reported diluted net income of $1.46/share and cash flow of $3.56, with averaged realized gas prices of $2.55/mcfg. As of 9/30/00, HECO's hedges covered a total 18.3Bcfg and 296,000bbl of future production . Management has forcast 2000 production of 27.0 bcfe. Using a $90MM market cap, $78MM of long-term debt at 9/30/00, and 33,600,000 BOE of proven developed reserves at 12/31/00, Hallwood is selling at a quite cheap valuation of about $5/boe. Gas production was flat Q2 '00 over Q2 '00, but they appear to have some good, shallow, lower-risk infill drilling prospects lined up in the San Juan Basin which are not included in the proved reserves. The company has warned, however, of possible problems in procuring timely field services. In summary, I view HECO as a compelling valuation opportunity due to its low valuation to earnings (about 6X), cash flow (1.5-2X) and per BOE of predominantly natgas proven developed reserves ($5.00 per boe). In light of the low realized gas prices, this is all very impressive,IMO. If the company can get results from its development efforts in the San Juan Basin (and further increase reserves) and show even modest gains in production, things will be looking quite good indeed. Company's website: hallwoodenergy.com I would encourage anyone interested to do their own DD, including reading the last 3 quarters earnings releases. The company does not release interim drilling or operational updates, so if one is looking for PR machine I suggest looking elsewhere. It appears that HECO is presently flying well below most radar screens, so I'm not sure if it's a great candidate WRT the hoped for March-May annual run of E&Ps. All questions, comments, criticisms welcome. Regards to all, TM