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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (4671)	11/30/2001 9:32:06 AM
From: Frank Pembleton	Respond to of 36161

Russ, I hold two big NG producers in my portfolio. Rio Alto which has 40% of production hedged at a prices close to spot (for CF stability) would probably benefit from Enron's implosion. The other, Pan Canadian has very little hedged and is profitable in this environment. As for my favorite driller... Might be tuff sledding today for Tesco. Regards Frank P.

To: russwinter who wrote (4671)	11/30/2001 12:59:48 PM
From: t4texas	Respond to of 36161

russwinter, you may be correct that a "reasonable man" ceo of a ng producer would turn down production as much as he can given his hedges may have gone away due to ene. besides the normal fixed costs the ng company must pay to stay in business, the debt service should govern how much the company could really slow down its production. i have not kept close track of the major ng producers' debt situations, because i have not owned them for about a year (except for a quick trade on dvn a few months ago). however i did read a few weeks ago that apa was taking all its hedges off due to apa's concern with the ene situation. maybe apa got some delta profit from the trades. i would think dvn has a heavy debt load to service with all the takeovers it has done. i am not clear on apc or br debt service structures. so some ng producers may want to cut back production, but some may have to produce more to pay the bills.