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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: kollmhn who wrote (15612)	12/9/2002 5:55:12 PM
From: jim_p	Read Replies (1) \| Respond to of 206395

Be careful with ATPG. They operate in the Gulf and have a very short half life on most of their properties. It's a good company, but operations in the Gulf with short life properties is like being on a tread mill. Not many do it very well. Jim

To: kollmhn who wrote (15612)	12/9/2002 11:40:40 PM
From: Ed Ajootian	Read Replies (2) \| Respond to of 206395

Kollmhn, re: ATPG -- <<CIBC is not exactly the cat's meow on E&P analysis, After all, they said ABP was going to be a $4 stock when you and I knew it was going broke.>> More to the point, about 13 months ago, when ATPG was around $6-7, this sorry crew had a Strong Buy on them with a $14 price target! But I think you'd agree that it is overly simplistic to generalize an inability to call future movements in a stock price to mean that someone is not good at any parts of E&P analysis. The November CIBC report shows a comparison of what they had predicted for 3Q and what actually happened. Their projection for 3Q production came within 1% of actual. <<Aside from that, the ATPG story is intriguing up to a point.>> Agreed. <<First off, it is said that they are at only 1.5 times CF (at $4.10?) yet, their recent (11/21)presentation chart showed 9 month 02 CF of $30mm. In order for 1.5X to work we need for CF to wind up 02 at $55mm. How will they get $25mm in just this quarter? (Probably a dumb question on my part?).>> YTD 3Q '02 cash flow was $42 M per the 3Q press release and 3Q cash flow was $13 M, and it would be a good guess that 4Q would come in around the same figure given the higher prices, offset by lower production. <<Secondly, I see rather modest production increases, i.e., 2000-24.4Bcf; 2001-25.7Bcf and 2002 estimated at 26.5. Now, I know that they are excited about Helvellyn coming on next quarter and that concervative estimates are for their half share to be 15mmcfpd. That works out to 5.5bcf per year. and, as they pointed out, would be a 20% bump in production over 2002. However, I'm concerned about their existing production which is still lower that the 1Q02 level and about their estimate that 4Q02 will only be 5.1Bcf. If the 4Q is the new run rate (20.4)then 2003 prod. will actually will be shrinking even with Helvellyn, until such time as they get another property on line. Their capex cut back this year may have reduced debt but production shows the price.>> The low increases in production are why the stock is priced so low. Remember, in the middle of all this they raised about $80 M of equity no less! On 9/30 they had more PDP reserves than on 12/31. Their production for 1Q '02 was 7 BCFE. I know different wells could have different flow rates, but how different could they be given that they are all in the same area? As mentioned in the 3Q PR, 0.5 to 0.8 BCFE of production was curtailed in 4Q due to the hurricanes. <<You are right, IMO, to suggest that the stock may need to pull back but, Im' not sure I see the screaming value that others do. Show me the light, 'cause I am probably missing some critcal considerations.>> Sorry, can't help you any more than I have tried already. Regarding jim_p's point, ATPG has a Reserve Life Index of 5.8:1 (154 BCFE of proved reserves at the beg. of yr., no signficant adds or sales, and 26.5 BCFE of production). This is slightly less than the typical 6:1 ratio for Shelf companies, and I realize this ups the ante for getting ahead of the curve. But what really intrigues me about this stock is their North Sea play. Even if they just tread water (pun intended) in the Gulf, they can grow the company significantly with their North Sea operations. And the economics there look pretty good so far -- on this Helvellyn project they were able to farm out a half interest in it for what appears to be well in excess of the total project costs. Hey, you seem like a smart boy, can you tell me how to compute ROI when the "I" is a negative number? I keep putting it in this damn calculator and it keeps saying "DOES NOT COMPUTE"! <g>