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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: dumbo who wrote (6123)	2/28/1999 4:01:00 PM
From: VisionsOfSugarplums	Read Replies (1) \| Respond to of 24926

Re REL - you made some good points, dumbo. Just a couple of comments and forgive my rambling - I say that the price is ridiculously low ($4 BOE). But I also have to say that in this environment, how you define what is fair is by who is strong and who is weak. REL is weak - too much debt and a bridge due, making them more than just highly leveraged. Dominion got an incredible deal IMHO and also aren't paying for any of the large upside. They could take on the debt and that is the key. A whole bunch of things were screwy on the situation, IMO, if you watched it play out. The takeover price per BOE quoted by First Marathon tells me that the reserve numbers they were using were not that far off from the Oct/98 reserve numbers reported. Remington has lost 75% of its value since its Q3 report and no new or explanatory information has been reported in that time frame. It may be that the only explanation may be that the market has changed or that management made some really bad decisions. It may be that it just looks screwy because the timing of every matter of import turned out to be to REL's detriment. It happens. In this kind of environment, the banks become incredibly tight. There is no shared risk - during good times shareholders can leverage off the banks but in the bad times, the shareholders lose to the banks. The exact same numbers don't provide the same bank lines in a bad market. But everyone knows that as well and so if a company incurs a lot of debt, it is a risk that has to be evaluated when looking at a company. The banking syndicate wouldn't loan REL the $60 million other than as a bridge in August - I see no reason to expect that they would change that decision seven months later in a poorer market. Markets change and shareholders have to face the facts. Part of that process involves actually obtaining and questioning the facts, which I'm not sure has completely happened here. Has the reporting process fallen down - I don't know. It doesn't appear that the reserve numbers changed much, a large component of value and valuation. It may only be that the bottom fell out of the market for REL because they had a bad Q3 and were weak. You're right about not tendering - chances are you'd just be squeezed and there would be no gain. Let's face it,though, the large break fee ($0.50/share)was intended to scare off other offers - not to compensate for Dominion costs or for Dominion to share in a better offer that may arise because they actually made an offer. Regards, t.