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

To: terry richardson who wrote (29590)	3/18/2003 8:28:50 PM
From: Art Bechhoefer	Read Replies (3) \| Respond to of 36161

Terry, I'm still holding CHK and UCL. CHK hedged almost all its oil production at $27, and about 60% of gas production at a little over $4/mmbtu. They obviously didn't anticipate weather related shortages for natural gas or a disruption in Venezuelan production. But their hedge prices are sufficiently good, plus the extra amount they've made with these really high prices, to warrant a stock price somewhat higher than the current level around $7.50. CHK is probably the largest oil and gas producer in Oklahoma, following its recent purchase of additional properties. The Kerr family (the late Sen. Kerr) apparently still owns a lot of CHK. As for UCL, this is really a play on increasing demand for oil and gas worldwide, combined with a special situation revolving around UCL patents for reformulated gasoline. The FTC is pursuing an antitrust action against UCL (probably in response to pressure from its friends at XOM). I think UCL will prevail, at least partly, and then all these companies that want to use UCL patents will start paying royalties of about 1 cent per gallon. It may take more than a year to resolve the patent issue. The Supreme Court, in a related action, has already upheld the validity of the patents. Art