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

To: outlook who wrote (125954)	11/25/2009 9:38:38 PM
From: Ed Ajootian	Respond to of 206325

outlook, Resolute Energy (REN) -- I don't think so since I don't think Resolute is going to trade based on how much EBITDA or cash flow its going to generate in the next year. This is not how Denbury, another EOR company, traded in the past (i.e. before they announced the EAC acquisition, and were closer to being a pure EOR play). Instead of trading on the next year's EBITDA, I believe Resolute will ultimately trade on the value of its reserves. It only produces about 5% of its total reserves in any 1 year, so the fact that a portion of that 5% figure is sold at prices below the current market (due to an underwater hedge) is probably not going to mean a heckuva lot to the stock price. Resolute is a bit under half way through a 12-year plan for their Aneth field in Utah, where, for the next 4-5 years, they expect to see about a 15% CAGR in production. They aren't trying to hit any homeruns in the meantime and to take the risk of not hedging production, to take a shot at getting a few million $$$ more of cash flow in the next year, doesn't really fit into that plan. It will take some time and effort by the company to get this story out but I believe investors will eventually figure this stuff out and value the company accordingly. Happy Thanksgiving All!!