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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 (30014)	2/18/2004 11:42:18 AM
From: jim_p	Read Replies (2) \| Respond to of 206087

Whodathinkit??? Message 19602554 Message 19556339

To: jim_p who wrote (30014)	2/18/2004 12:13:11 PM
From: kollmhn	Read Replies (2) \| Respond to of 206087

More detailed info from MS: Highlights What We Like • Liquidity is sound for now, buying El Paso time. The company had liquidity of $3,015 million as of 12/31/2003, including $2,015 million of cash and $1,000 million in availability under its $3,000 million revolving credit facility. What We Question • The current stock price discounts very good news, in our view. The stock does not pose an interesting risk/reward, in our view until it trades to under $5 per share. We view the stock at $8.81/share to have significant downside risk (at least $3 to $5) in coming weeks, given our assessment of trough net asset value of $2.75/share. While NAV of $2.75 suggests downside risk of up to $6, our expectation is that the stock does not trade down to its trough NAV because of El Paso’s sound liquidity position. • El Paso’s E&P business is struggling. In our view, a 1.824 billion write-down in a $6/mcf natural gas environment suggests to us that prior management had significantly overstated the productive capacity of the company’s gas reserves. The write-down would be and still will likely be much more significant should natural gas prices correct to more normal levels. El Paso has hired an independent law firm to determine the underlying reasons for such a significant reserve misstatement. Has Our Outlook Changed? • No changes yet to our 2004 & 2005 EPS estimates. • Cutting our net asset value to $2.75 per share based on Ryder Scott’s assessment of 2.635 Tcf of proved gas reserves." That's 'fugly'