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

To: Larry S. who wrote (19358)	3/1/2003 9:04:00 AM
From: russwinter	Respond to of 206326

<exploring for assets on the floor of the NYSE is a wiser course than drilling in the ground.> If you can get those assets for the prices CHK and DVN did that's great, but may be problematic going forward. I would surmise that those deals were in the works for sometime so they fell together. However, M&A was also the route the gold miners went in 2001-2002, and now they're scratching their heads wondering where future production out beyond about 2006 comes from. For most companies the drill bit is the only way to go. They should be allocating their windfalls to 1. major stock buybacks 2. some debt reduction. 3. the drill bit. 4. M & A if they're lucky like DVN and CHK were. For companies that refuse to explore, I would price them as royalities, and insist that they return their liquidating capital to shareholders. In fact they may as well set up MLPs.

To: Larry S. who wrote (19358)	3/1/2003 1:46:05 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206326

DVN -- I didn't do the math myself but I read that DVN paid about $1.50/mcf to buy Ocean Energy. If so they got a great deal IMO and I don't understand why Ocean sold out for so little. As Russ says this deal was probably in the works for awhile but for public deals the Ocean board meeting approving the deal would likely have been held just prior to the announcement, and Ocean management could have recommended to their board not to approve the deal if they'd wanted to. This is one way how public companies back out of deals, even after papers are signed -- I've seen it happen before firsthand. I would agree with your comment, to the extent there are still some fools stuck in the past who are ready to sell their reserves for < $1.50 an mcf. These days its hard to maintain an exploration/development program that can keep finding costs from exceeding $1.50/mcf for very long.