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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 (30397)	2/29/2004 4:14:54 PM
From: chowder	Read Replies (2) \| Respond to of 206092

The Battle of EP vs RRI ...... Too many people fail to understand the law of supply vs demand when applying it to trading or investing. In the case of EP, there is a huge amount of overhead supply waiting to come to market. With EP's fundamentals gone to hell in a hand basket, I find it very difficult to believe there will be a large enough amount of demand to overcome the amount of supply noted on the chart. The people who are buying now are those who are covering short positions and some short term traders looking to make a 2-3 day profit. We might be seeing an occasional value investor, although I fail to see the value, and maybe even a Contrarian or two. However, that IS NOT the kind of buying that is going to work through that overhead level of supply. stockcharts.com[h,a]waclyiay[pb40!i][vc60][iut][J26562685,Y]&listNum=1 If one wants to contrast that to the amount of overhead supply on RRI, you will note that it is minimal in comparison to EP. This indicates there won't be as much downward pressure on RRI as there will be on EP. stockcharts.com[h,a]waclyiay[pb40!i][vc60][iut][J24730206,Y]&listNum=1 EP will be selling off on good news, if any comes. RRI will be accumulated on good news, if any comes. Let the battle continue. dabum

To: jim_p who wrote (30397)	2/29/2004 9:21:58 PM
From: Bruce L	Read Replies (1) \| Respond to of 206092

REASONS TO OWN EL PASO: l. ASSETS ARE IN DEMAND AND MAKING MONEY EP owns the country's largest NG pipeline system and this constitutes approximately 75% of its assets. Unlike power plants that are at present a glut on the market, pipelines make good money (10-11%); and they will always make money. They do not have to worry about about spark spreads or when, or if, their market will recover. These can always be monetized at close to book value whatever happens. (One or two pipelines may have sold last year at distress prices. But that was last year.) 2. EP's OIL & GAS PRODUCTION DIVISION WILL BE TWO TO THREE TIMES MORE PROFITABLE THIS YEAR _ AND THE FORESEEABLE FUTURE - THAN IT WAS IN 2001 & 2002 These assets represents most of the rest of EP's assets. The proved reserve reduction of 35%(not 41) is a bookkeeping entry and does not affect either current production, or cash flow, or profits. Virtually all of these proved reserves are in the continental U.S. and are thus much, much more valuable than, say, the Brazilian reserves which were removed from the proved category because they did not yet have a customer. Even without any further capex or effort, EP would average 680 0750 mmcfe per day for the balance of 2004 based even on depletion rates as high as 25 -40% (Confirmed by Ryder Scott). Except that EP will not sit on its heels, but will spend $850 million to bring that daily production up to 850 - 950mmcfe. This extra investment will, of course, more than pay for itself. 3. MARINER As everyone knows, an announcement could be made any day. Even for a company as big and debt-ridden as EP, 50 % of 1.2 trillion cubic feet of NG will make a huge diference, paying off its entire debt and then some. A lottery ticket maybe, but at some price worth holding EP stock for this reason alone. 4. MERCHANT ENERGY WILL GO FROM A BIG NEGATIVE TO A POSITIVE BY THE START OF 2005 EP projects it will lose $450 Million in this division in 2004. However, 70 % of its contract expire this year and in 2005, it will have a positive cash flow of approximately $450 million and will recover working capital held as security of another $500 - 600 million.. This is a 1.5 $Billion swing and the money can be used to pay down debt. 5. SALES OF NON-KEY ASSETS IS AHEAD OF SCHEDULE AND REALIZING HIGHER PRICES THAN PROJECTED In October 2003 EP announced that it intended to sell $3.3 - 3.9 billion in assets by the beginning of 2005. At the Feb 2004 CC, they announce that they were ahead of schedule and realizing higher than expected prices. In their report issued after 2/20/04, Argus Research projects that EP could be down to $13.5 Billion debt by the end of 2004. POSITIVE RESEARCH REPORTS On my own, I might not be so confident. But three respected research firms or individuals recently have opined their belief in positive prospects for EP. It's hard to reconcile your dire predictions with these 3 separate independent analyses. 1. Deutche Securities just before the reserves restatement raised EP to a "Buy." 2. Argus Research rates EP a "strong hold." They issued this ater the reserves restataement and believe that EP will earn in 2004 $.90 per share exclusive of spcial non-recurring charges. c. Archie MacAllister in today' Barron's (Abelson's column) which I've already detailed. DERIVATIVE LAWSUITS NO BIG DEAL IF EVERYTHING ELSE IS POSITIVE EP tanked and went to $4/share without a restatement of reserves. Buyers cannot claim damages for that fall. What they can claim is the fall from $8.60 before the announcement ato ~$7.30 today. But if when the case comes to trial in 2 -3 years - and if EP's shares are $13+ - and if much of the reserves taken from proved are put back in that category - then the damages if proven are going to be manageable. JMVHO. Bruce