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

To: Tommaso who wrote (19322)	2/28/2003 12:49:43 PM
From: whitepine	Read Replies (1) \| Respond to of 206324

Tommaso and EP, I would suggest listening to presentations of BMO Conference held the last two days. Link via Thunderenergy.com page. My take on drilling in Canada is limited only able crews. Charts of PEY, THY, CQL, and CMT are impressive compared to US counterparts (?) THY AND CQL (long both) are unhedged. Don't know about PEY (also long). Maybe I am too easily impressed, but their views reflect greater potential than BR's. Presentations have great graphs (PWI's) though you will probably note these did not include comps vs. AVN (also long). Holders of AVN have been rewarded since Dec. JMO....DD whitepine

To: Tommaso who wrote (19322)	2/28/2003 1:44:23 PM
From: russwinter	Read Replies (1) \| Respond to of 206324

You might want to listen to the CHK call. They really stole El Paso's property. The leverage is financial (gas on margin play), operational, and commodity based, but if you see $5 plus gas for the next year or two, they are going to clean up cash flow wise, and the debt will get reduced in little time. biz.yahoo.com

To: Tommaso who wrote (19322)	3/3/2003 2:30:41 AM
From: energyplay	Read Replies (3) \| Respond to of 206324

Leveraged NG plays - Tommaso asked - "What do you see as the most highly leveraged way (other than futures, will I will never touch) to profit from what truly is shaping up as a disaster for the natural gas supplies?" I thought pretty hard about this question. I see a spectrum of leverage and risk. I have a number of positions over this spectrum. Let's assume that higher natural gas prices are a given. So we assume there is zero risk there. Part of the remaining risk is that the security's price will not respond to the higher profits and value. We have all seen situations where X goes up, profits go up, and the stock doesn't move or goes down. Here's may estimated table of leverage and response reliabilty , and time delay for various asset types - Foramt is - Asset - Leverage - Price response reliability -Time delay 1) Physical gas 1.00 Leverage - 99% - zero delay Price controls or pipeline delivery problems keep this from being 100% 2) Futures contracts 10+? Leverage 98% zero delay to two days (weekend) Again, price control or government intervention. 3) Gassy U.S. gas Royalty Trusts(SJT) 1.50 leverage - 90% - about a 2 month delay. Leverage is about 1.50 because of costs of about $2.00. This leverage can be higher with some trusts with more expenses. Looks like about 85+ % of increase goes into asset price. Close to 100% gas production. While there is a daily and weekly response to gas prices and storage, most of the price response happens about 2 weeks befor and one week after the dividend announcements. 4) Gassy Canadian Royalty trusts 1.60 leverage 70% About a two month delay. Leverage is a little higher since AECO hub prices started lower than U.S. prices. Reliabiltiy is about 75% because companies can mess up buying property or issuing more shares. Some tend to be about 75% gas, 25% oil. While there is a daily and weekly response to gas prices and storage, most of the price response happens about 2 weeks before and one week after the dividend announcements. The Canadians seem to track price quicker that the U.S. trusts. 5) Large gassy E&Ps (APA,APC,BR,DVN,ECA,EOG) 1.4-2.2 leverage. 55% price response. Delay 3 months. Leverage varies with debt, wtih DVN being high. The price response is muted due to Wall Street expecations of falling energy prices, effect of mergers. These stock are heavily driven by quarterly earnings number, with only moderate anticipation. All of these stocks have options for more leverage. Risk exists with time decay of options AND Wall Street being slow to value these stocks correctly. 6) Smaller cap E&Ps 1.2 -4.0 leverage , 45% price response. Time delay varies with stock. High leverage / high debt names like CRK ,CHK ,etc. We need to look at each stock -some follow NG prices, other stocks are earnings driven and others are drilling results driven. Most of these stocks do not have options, or liquid options markets. One big risk with all the samll caps - if even NG prices stay up, if oil prices drop, Wall Street may decide to ignore E&P for a year, and these stocks can just sit there. ****** Most highly leveraged - 1) options on E&Ps 2) High debt small caps CRK, CHK, BEXP, etc. (buy a bunch, there's sure to be one bad apple) 3) Canadian Royalty trusts 4) U.S. Royalty trust 5) Big E&Ps Normally, Big E&Ps would be number 3 - but I have not seen the valuation response from Wall Street, or I think it might be muted this cycle, maybe by recession worries, down market, etc. The transmission mechanism from future earnings to stock price seems to be broken for big E&P stocks.