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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (34710)	6/4/2003 3:37:56 PM
From: energyplay	Read Replies (3) \| Respond to of 74559

Hi Jay - The natural gas situtation is commig to the well known fork in the road. Grouping a continum in 4 outcomes 1) Prices decline under say $5.50 -$5.00. Maybe 5 % chance of this still. Needs cool weather, successful drilling and lots of it, some coal burnig. Good news is there is a lot of demand which will turn back on at about $5.00 which should keep the price from going much lower. I think we might want to keep most of the royalty trusts, especailly since the are better than many other investments at this time and provide some inflation protection. If we are heading for this, it could be useful to trim some of the high flyers - SJT & HGT come to mind. 2) Prices in the $5.50 - $7.50 range or so. Enough demand destruction that supply and demand balance. The lower end of thsi range is a more sustainable price - and could actually lead to more drilling than the higher price, which many would expect to be replaced with much lower prices. In this price range, which could be the long term new level, it might be posssible to jsut sit on the Royalty trust for a number of years and collect dividends. . 3) - Serious shortage - A warm summer and normal to slightly cooler winter would mean prices headign toward $8.00-$9.00, maybe spiking to $10. 4)- Severe shortage - Worse case / 'perfect storm' - warm to hot summer, not enough nuke activity, not enough coal burning or conservation. Follow with a 1 sigma cold winter. Price October - March would average more than $10, maybe hit $15. Rationing and restrictions. Ij 3) and 4) there is likely to be a time when we will I will post a pointer to a link to Robry's charts showing how these play out.

To: TobagoJack who wrote (34710)	6/4/2003 3:41:59 PM
From: Check	Read Replies (1) \| Respond to of 74559

Hi Jay and thanks for recommending the <<gumph>> at my OilpatchUpdates. WRT to BTE, I run some quick numbers on it this morning and I also bought some - mostly for the kids educational trust with my mother’s money. OilPatch and ELH left me kind of dry. <GG> Assuming full dilution (i.e. all Q1 option exercised), $ 24 WTI, $4.25 HH, $.75 C$, no hedges (except the 20 mbbls/d heavy oil contract) and all price differential & operating costs as in Q1/03, I still get a juicy $1.60 distribution or 13.62% based on the current $11.75 share price based on a 60% payout. That would leave approx. $ 62 MM for reserves replenishment. Not bad at all. I temporarily stuck the numbers into the 1996 column in the dropdowns - don’t ask me why, but they won’t stay there very long because I don’t want to give people the idea again that we are in the forecasting business. oilpatchupdates.com Thanks again and have a good one. Check it out.