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

To: quehubo who wrote (26142)	10/5/2003 10:53:49 AM
From: jim_p	Respond to of 206325

But at what price do NGL's get rejected? This is a much more important factor than many of us here realize to future energy cycles. The answer to the question is it doesn't get rejected because like IPP's the cost and the time period to get approvals, financing and projects completed is enormous. Many of the projects will be done with long term contracts for LNG around the globe where there is plenty of NG and no markets to sell into (there are plenty of them). The result will be that future cycles will be distorted and when the market moves far enough in the wrong direction the contracts will become worthless. Back in the 70's when unregulated NG was selling for $10.00 or more (in 1970 dollars), many LNG plants were built and many long term contracts were signed at incredible prices. Some of those same LNG plants are now coming out of mothballs some 30 years later. Back in the late 70's we all thought NG and oil production had peaked and the world was running out of energy. There was a scramble to tie up production at any cost. Can history repeat itself some 30 years later???? Never say never in the oil patch. Jim

To: quehubo who wrote (26142)	10/5/2003 10:56:55 AM
From: jim_p	Read Replies (2) \| Respond to of 206325

An excellent post from the RRI board over on Yahoo. by: tokatoto Long-Term Sentiment: Strong Buy 10/04/03 08:07 am Msg: 62332 of 62365 The RRI story is very simple. Unfortunately market experts and individual investors want to make things complicated. The company has an asset base that under normal conditions (i.e., no glut of electricity capacity) should earn it at least $2.00 per share. In 2003, the company's $10 billion of power assets is going to generate a mere $200 million in EBITDA - that's a 2% return. Who's going to build new power plants to meet our electricity needs in the future when you are only getting 2%? Nobody. So we wait. Electricity demand grows on average by 2% per year. In about 3 years most of the excess capacity would have been absorbed and electricity prices must rise in order for the producers to generate a reasonable return in order to spur new construction. People, this is not rocket science, just Economics 101. The most important thing about investing in the sector is to make sure that there is no short term liquidity risks that can destroy a company before it has a chance to prove its a viable long-term concern. RRI has NO MEANINGFUL DEBT DUE UNTIL 2007! In the meantime, RRI has ended new construction so its cash flow beginning in the second half of 2004 will be substantial even if profits are only modest (i.e., depreciation will exceed maintenance capital expenditures by $250 million). Anything that will happen next week, next month, even next year is noise. People will grossly overreact to both good and bad news. Personally, I'll trade around my position whenever this happens. But I will always own a ton of RRI stock as a core holding because the future looks so obvious to me. At least $20 per share by 2006.