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

To: jim_p who wrote (29995)	2/18/2004 8:22:57 AM
From: Think4Yourself	Read Replies (2) \| Respond to of 206092

Hi Jim! Glad to see you are still hanging around here. I have a question on EP. Why did they blame the Proven Reserves downgrade on high NG prices? I understand the production shortfall part of it but aren't high gas prices supposed to increase reserves because it is more economically feasible to get at difficult deposits? Not only do I not understand their reasoning but yours makes much more sense to me. Their reserve estimates TANKED and if they used $6 like you said then their reserves are going to tank even more. Isn't importing LNG still economical at below $5?

To: jim_p who wrote (29995)	2/18/2004 11:48:51 AM
From: kollmhn	Respond to of 206092

Jim- Morgan's follow up comments: "1.824 trillion cubic feet reserve write-down announced. 1.8 Tcf write-down was in-line with our expectation of 1.7 Tcf or higher. $1 billion pre-tax charge with $6.00/mcf gas price on 12/31/03. Should gas prices move to more normalized prices of $4.00/mcf, an additional $3 billion of write-downs are expected. Key takeaways from the news and the call: Liquidity has improved of late, although solvency (net asset value) has declined. Key third party in El Paso CGP South Texas production consortium has dropped out. Management is maintaining its gas production forecast and earnings estimates for 2004 and beyond. We remain skeptical of the forecasts. Maintaining our Underweight-V rating on the stock. We believe that at $8.81 per share, EP is pricing a much more optimistic outlook on EPS power than we estimate. We believe that EP will likely earn $0.35 to $0.40 in EPS on an ongoing basis, versus recent management guidance for 2006 of $0.75 to $1.10.