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Gold/Mining/Energy : Strictly: Oil and Gas Exploration Companies -- Ignore unavailable to you. Want to Upgrade?

To: William JH who wrote (154)	4/3/1999 2:13:00 PM
From: PuddleGlum	Read Replies (2) \| Respond to of 318

William- The independent E & P business model does not seem to work for investors, only corporate insiders and stock exchange insiders. Borrow against reserves for exploration, keep borrowing until the price of O & G crashes, then take impairments and writedowns, and on and on. I agree with your assessment that the independent e&p business model doesn't work some of the time, which is why I tend to avoid the real small e&p companies, but I believe that some companies can and do make it work. I have a small position in APA, a larger one in APC, and still larger in SFY. SFY has maintained profitability (not just positive cash flow), while APA and APC are very sound companies with a good outlook for the future. I noted your post on Strictly Drilling about natural gas deliverability over the near to medium term. SFY produces 75% ng, while APC has around 47% gas in its proved reserves, and APA has a bundle of gas stashed away. pg

To: William JH who wrote (154)	4/4/1999 8:48:00 PM
From: Robert T. Quasius	Respond to of 318

MEXP is similar to SMIN, and SMIN's solution might just how MEXP will turn out. I think SMIN might just survive, although they have been in trouble for a few months now due to similar loan covenants to MEXP's. Here's are some comments of mine, posted on the SMIN board. I have just finished reading the new SMIN 10(k) filing, which outlines the restructured loan agreement with senior lenders closed on March 31, 1999. The line of credit was reduced, based upon the lower asset values at December 31, 1998. There is a principal tranche of $12,500,000 representing the overage above the new line of credit, that will be due on September 1, 1999. SMIN is expected to seek sale of assets, and any money raised must be applied against the $12,500,000 principal tranche until it is paid in full. The line of credit will be subject to review in July, and I think could very well be adjusted upwards based upon recovering commodity prices, increasing the value of underlying collateral assets. Also, SMIN could refinance their senior debt to get themselves out of the current mess. SMIN is definitely in trouble, as noted by the statement from the auditors about SMIN continuing as a going concern. However, events between now and September 1, 1999 will determine if SMIN will default on the restructured loan agreement. Even if a default appears imminent, SMIN could once again restructure. If SMIN does survive, this stock will definitely be a multiple bagger, and I wouldn't be surprised to see a share price of $1.00 - $1.50 by year end. I calculate current book value at around $1.20, using asset values as of 12/31/98.