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

To: Dennis Roth who wrote (167274)	4/17/2012 1:28:50 PM
From: elmatador	Read Replies (1) \| Respond to of 206101

YPF conflict could follow Petrobras model evidence indicates it may be a strategy designed to follow the precedent set by Brazil's government using Petrobras (NYSE: PBR) to develop that nation's significant pre-salt resources. Message 28087413

To: Dennis Roth who wrote (167274)	4/18/2012 5:19:14 AM
From: Dennis Roth	3 Recommendations Respond to of 206101

Repsol YPF SA (REP.MC) DECREASE TARGET PRICE Living la vida ... Maintain O/P; Lower TP to €20.0/share (from €25.0/share), which is based on a 20% discount to our new risked NAV. Repsol’s balance sheet exposure to Argentina is ~€5.6bn, comprised of €4.1bn book value (BV) and ~€1.5bn vendor loan to the Petersen Group. We assume ‘no’ value to the vendor loan; the value of which is probably more closely linked to whether Argentina can attract partnerships (with technical expertise) for the non-government shareholding, thus compensation to the Petersen Group in the absence of the much needed cash dividend. We apply a 50% COS to the BV. Following the expropriation of 51% of Repsol’s 57.4% stake in YPF, we lower our EPS estimates by 15-20%. We also assume a rebasing of the DPS and forecast a DPS of €0.95/share. Argentina – where from here? There are many differences in views between Repsol and the Argentinean government. One of the differences is the YPF Bylaws (~$10.5bn) versus the Expropriation law (probably closer to book value and the most the government would pay, in our view) in the context of the compensation. In theory, and this is debatable legally, the new board at YPF, can change the existing Bylaws and move closer to the Expropriation law. Unclear timing – the timing is hard to predict and will also be determined by whether Repsol pursues the path of an international arbitration à la XOM with Venezuela or a more direct approach with the government à la Eni in Venezuela. International arbitrations in the case of XOM are still ongoing after its assets were seized in 2007 in search for market value of the expropriated assets, while Eni managed to negotiate in a more direct way with Venezuela and was paid in early 2008 after its assets were seized in mid 2006 in a cash settlement equal to the book value. In the context of the latter, a more timely, if any, settlement could be reached directly with the Argentinean government rather than facing something that is likely to be more protracted if taken to the ICSID in search for a value closer to the YPF Bylaws, which in turn is close to what Repsol stated yesterday it was being offered by other companies. Valuation: Our TP of €20.0/share is based on a 20% discount to risked NAV. 11 pages Download link page: sendspace.com === So is anyone taking a flier on Repsol? Catch a falling knife? Has the market overreacted?