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

To: Tomas who wrote (22631)	5/15/2003 1:40:20 PM
From: DELT1970	Respond to of 206325

Friedman Billings Ramsey is going to like the injection number, given their preview posture. "We recommend that investors "go long" energy equities going into the Summary and recommendation. weekly natural gas storage injection numbers, which are due to be released on May 15, 2003, at 10:30 a.m. EST. Our recommendation is based on our comfort with consensus estimates that 80 Bcf of natural gas was injected into storage last week. This comfort is based on the strong growth in U.S. electricity generation reported at on May 14, 2003. Earlier today, the Electric Edison Institute (EEI) reported that power consumption Power numbers bullish. during the week ended May 10 totaled 68,070 gWhs, representing a 2.5% increase Y/Y and 4.2% increase over the prior week ended May 2. Given our position that marginal increases in electricity generation will be sourced from gas-fired plants, the higher electricity prices during the reported week, and other variables driving our gas injection outlook, the consensus estimate of 80 Bcf for tomorrow's injection report is attainable, in our opinion. In our opinion, an 80 Bcf injection will do little to allay the increasing risk that natural gas inventories will not reach sufficient levels for 2003–2004 winter consumption. As a result, we expect gas prices to remain at current levels and to, in turn, drive gas-weighted E&P equities higher. We only anticipate a bearish response to the injection report if it is well above the consensus. Our gas inventory analysis projects best- and worst-case scenarios for starting winter inventories of 2.7 Bcf and 2.4 Tcf, respectively. The best-case scenario forecasts average weekly injections of 80 Bcf for the remainder of May, 84 Bcf injections during the summer, and injections of approximately 52 Bcf during September and October. Our optimistic forecast assumes that normal summer temperatures prevail (temperatures comparable to those of the summer in 2000) and that temperatures will be 15% milder than those witnessed last summer. Our worst-case scenario accounts for additional drivers that may play out and increase the call on natural gas. These variables include: hotter than normal summer temperatures, non-weather-related growth in base-load power consumption, displaced coal base-load generation due to the NOx SIP call, little fuel switching and industrial demand destruction, and extended nuclear plant downtime. Storage levels entering the 2003–2004 heating season at 2.4–2.7 Tcf are rather ominous, given that the average storage draw has averaged 2.0 Tcf and has ranged from 1.7–2.5 Tcf over the last five years. RECOMMENDATION We reiterate our belief in the sustainability of current natural gas prices. We recommend that investors accumulate shares of gas-weighted E&P companies. Large-cap names that we recommend include Burlington Resources (BR: $50.61 – Outperform) and Devon Energy (DVN: $48.93 – Outperform). Mid- and small-cap names that we recommend include Pioneer Natural Resources (PXD: $24.88 – Outperform) and Comstock Resources (CRK: $12.27 – Outperform)."