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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: Crossy who wrote (23973)	9/27/2006 8:46:16 PM
From: Ed Ajootian	Read Replies (2) \| Respond to of 37387

Crossy, TG World Energy (TGE.V) -- I didn't realize you had held this one, great call. Its interesting that you are not comfortable with explorers and prefer producers right now. I am going in precisely the opposite direction, I am not buying any producers right now and have sold virtually all of my holdings in these (with the exception of ATPG and ARD, but even those positions have been trimmed). Especially for producers with large exposure to North American natural gas, I believe the next few months will be unkind to these sorts of companies. I believe we will see many companies record full cost ceiling writedowns on their reserves due to the low natty prices. Also, for companies who are being followed by analysts, its likely that they will miss earnings estimates for 3Q, and that 4Q projections will be reduced pretty significantly due to the fact that the assumptions for the price of gas used for projections of each of these quarters turned out to be too high. Explorers, on the other hand, have none of the above problems. TGE.V has no reserves and no production, yet is fully cashed up, with all the money it needs to execute its drilling plans for the next year or so. Since it is exploring for oil vs. gas, gas prices have no affect on its prospects for success. Since it is not expected to become a producer of oil for at least the next several years, it is only affected by what folks' long-term views are about the price of oil (vs., e.g., the near-month futures contract). Do you like the producers because you expect oil & gas prices to go up from here?