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

To: Spekulatius who wrote (47617)	4/25/2012 11:41:23 PM
From: Spekulatius	2 Recommendations Read Replies (1) \| Respond to of 78673

re HES, I am likely to add more after reading the CC transcript. The earnings miss, while significant, is partly due to heavy investment and to lock in their Bakken acreage for production. They also invest huge amounts of money in infrastructure - a rail terminal station for and pipelines for crude in the Bakken (500M$) and a NG separation plant (500M$). The rail station has a capacity to move 50k brl/day. Both are nice assets that could easily go into an MLP once fully operational. Rather than stated book, which is based on historical cost, I like to value E&P based on proved reserves and HES is somewhere in the range of 16$/brl, which sounds awfully cheap with crude around 100$/brl. And this does not even take into account the acreage, pipeline assets, rail terminals, marketing assets, gas stations and refineries that HES owns. No question that it is cheap based on the asset value but there is a question if and when they can unlock that value.