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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Grantcw who wrote (38186)	6/5/2010 1:03:47 PM
From: Spekulatius	2 Recommendations Read Replies (1) \| Respond to of 78476

re shallow GOM players. the shallow GOM is over-explored and what is left are mostly small NG fields. it's tough to make a dime here. SGY for example has a long history to destroy shareholder value and at least on a first look, the stock does not look that cheap with an 2.5$ valuation/ MCFE. I bet is you can find onshore plays with a lower valuation than that. The EV/EBITDA ratio is low for GOM players because these gas reservoirs decline quickly 2-3 years and they are gone. Don't be fooled by that number. because of the short life, they need to drill and find new reservoirs constantly, and if they get a streak of dry wells they are in deep trouble. This may be a good bounce play but I bet it's going to be a bad LT investment.