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   Gold/Mining/EnergyOil & Gas Exploration & Production Co.'s

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To: DELT1970 who wrote (64)5/18/2003 7:53:22 PM
From: Ed Ajootian
   of 112
Yes, I have even bought a little of it, right after the 1Q press release. They are getting a very low multiple of Enterprise Value/ EBITDA. Their EV is actually a bit _lower than their market cap because they not only have no net debt but actually have net excess cash!

Been meaning to look at them more, and listen to the 1Q CC, but right now I'm having too much fun buying the over-levered burn-outs that are being saved by these high commodity prices, where the market has been a bit slow in realizing the turnaround: KCS, ATPG, TMR, MSSN, etc.

Would be interested to hear what you think about XEC if you look at them more.

BTW, I need to retract my previous comment about EPL, it looks like their earn-out payment was only about $1 M for 1Q, obviously not large enough to warrant special disclosure. Still a bit befuddled as to how their debt got so high in the 3 months ended 3/31/03, but it looks like they are in good shape now that they raised the equity capital.

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To: Ed Ajootian who wrote (65)5/19/2003 11:29:59 AM
From: DELT1970
   of 112
Merrill Lynch is pounding the table today for Pogo, Stone, Newfield and Energy Partners. On EPL they say:
 Energy Partners (EPL, $10.74, C-1-9)
• A value, offshore Gulf of Mexico oriented E&P that
focuses on balanced operations (exporation,
exploitation and acquisitions), 60% of its production is
natural gas, roughly 30% of its 2003 production is
hedged. Our current 2003 fully diluted operating
EPS/DCFPS estimates of $0.97/$3.92 assume 22%
volume growth, and our 2004 estimates of $0.37/$3.64
forecast 5% volume growth, and assume no
exploration success. EPL could generate $50 MM in
free cash flow this year. Our $14 price objective is
based on 3.6x 2003E DCFPS, which is in line with its
offshore oriented peer group average. The risks to
achieving this price objective is a sustained decline in
commodity prices, unfavorable drilling results, oilfield
services cost inflation and project timing delays.

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To: Ed Ajootian who started this subject5/29/2003 3:59:04 PM
From: sam_n_cctx
   of 112

i dunno if u still follow, or get the press releases from EPL, but they just announced, two sucessfull well completions


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To: sam_n_cctx who wrote (67)6/2/2003 10:22:53 PM
From: Ed Ajootian
   of 112
Thanks guys re: EPL. I still own some of it and follow it. Great to see it get up to $12! I saw today where Apache is getting rid of some deadwood in their GOM inventory, maybe EPL will bid on some of that and add to their holdings.

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To: Ed Ajootian who started this subject6/2/2003 10:23:39 PM
From: Ed Ajootian
   of 112
Small US LNG Player Cheniere Thinks Big
(Copyright © 2003 Energy Intelligence Group, Inc.)
World Gas Intelligence Wednesday, May 21, 2003

Tiny Cheniere Energy's award this week of a front-end engineering design (Feed) contract to Kansas City-based Black & Veatch (B&V) could one day yield the two largest LNG terminals ever built in the US -- each a merchant facility able to handle around 2 billion cubic feet per day of gas (15 million tons per year of LNG), twice the size of any existing US terminal.

Cheniere yesterday announced that B&V would do engineering for both a Corpus Christi, Texas, and a Sabine Pass, Louisiana, site in preparation for a January filing with the Federal Energy Regulatory Commission (FERC).

Each site fits Cheniere's ideal profile for new terminals: industrial areas close to major pipeline hubs, where landowner concerns are expected to be minimal (WGI Jun.20'01,p2). Like CMS' Lake Charles terminal, these sites are close enough to big enough pipelines that -- thanks to blending -- the high Btu content of gas coming from LNG supply sources other than Trinidad poses no real problem.

The Corpus Christi facility is to be developed through a partnership with a limited liability affiliate of Sherwin Alumina, a neighboring bauxite refinery. Cheniere would be operator and 70% owner. The site is next to the deepwater La Quinta Channel, where LNG tankers could dock easily. The terminal would also house three 3 Bcf storage tanks.

The Sabine Pass project is currently 100% owned by Cheniere, a Houston-based upstream independent that ventured into the LNG business just three years ago.

Cheniere also has a 30% stake in Freeport LNG, a project 60% owned by tightly held Freeport Investment and 10% by Contango Oil & Gas, that aims to bring 1 Bcf/d of LNG into Freeport, Texas -- and for which an application was filed with FERC last month.

Contributing to the proliferation of LNG sites on the US Gulf Coast -- including Sempra's Hackberry, Louisiana, and ChevronTexaco's offshore Port Pelican sites -- Cheniere has an option on a fourth site in Brownsville, Texas. However, this is expected to take a back seat.

Cheniere Chief Executive Sharif Souki foresees a 10 Bcf/d LNG import market developing in the US in short order, and he recently hired Keith Meyer, former head of LNG project development at CMS, to help his company grab a big piece of that action (WGI Mar.19,p.2).

Souki expressed confidence that Cheniere could have at least one terminal authorized and built by 2007, citing more flexible licensing procedures (WGI Jan.22,p1). "We have no intention of getting into the LNG chain as other than a terminal operator," he told WGI, adding: "We are currently talking to half a dozen potential customers and expect to have one lined up for Freeport soon."

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To: Ed Ajootian who wrote (69)6/2/2003 10:37:28 PM
From: Ed Ajootian
   of 112
Cheniere Hires CMS' LNG Guru To Implement Gulf-Based Strategy
(Copyright © 2003 Energy Intelligence Group, Inc.)
Natural Gas Week Monday, May 12, 2003

Determine d to capitalize on what it sees as a 10 Bcf/d liquefied natural gas (LNG) import market in the near future, Cheniere Energy has hired on one of the industry's big guns to head up its LNG division.

The Houston-based company said late last week that Keith Meyer, who formerly headed up LNG operations for CMS Energy, the owner and operator of the Lake Charles, Louisiana, LNG import terminal, will join Cheniere as president of its Cheniere LNG subsidiary. The personnel change will take place as soon as the sale of the CMS Panhandle pipeline unit to Southern Union is complete, Cheniere said.

"Cheniere is an attractive company to me because they are very focused in the development of LNG terminals and have secured some of the highest quality sites I have seen. A properly executed plan, and one which I intend to see to fruition, will see Cheniere becoming North America's premier LNG gateway," Meyer told Natural Gas Week.

Cheniere, once a typical and little-known small producer in the Gulf region, has muscled into the LNG business to compete with the better-financed majors and integrated companies (NGW Jun.18, '01,p1).

Cheniere and other independents face increasingly high production costs on the shallow water shelf Gulf of Mexico and fewer prospects. At a recent New York conference, Charif Souki, Chenier's chairman, cited a $4/Mcf gas price as necessary to justify further exploration there.

Souki sees a need for up to six new receiving terminals in the US. After searching for potential import terminal sites, Cheniere has set its sights on four potential locations all catering to the Gulf Coast market.

"It's the home of numerous industrial and gas consuming facilities, it's close to any number of major pipeline systems…[and] the atmosphere is just more friendly to industry. You will never see a receiving terminal in New York Harbor," Souki said.

Souki does not view as particularly promising for a company of Cheniere's size the Florida gas market, which companies such as Tractebel and AES are considering as targets for a Bahamas-based LNG facility. "Unless you have a contract with Florida Power and Light, it's difficult to bring gas into that market," he said.

As a LNG terminal operator, Cheniere is aiming for maximum flexibility for potential users of any proposed facilities. The Freeport, Texas, LNG terminal -- 30% owned by Cheniere, 60% owned by privately held Freeport Investment, and 10% owned by Contango Oil & Gas -- met all of Souki's specifications and was the first to be announced (NGW Jun. 25, '01,p8). Within a 60-mile radius of Freeport's numerous industrial parks, Souki is eyeing a 6 Bcf/d market.

The other sites for which Cheniere has secured options for LNG receiving terminals are Corpus Christi and Brownsville, Texas, and Sabine Pass, Louisiana. Like CMS's Lake Charles terminal, these sites are located either in primarily industrial areas or close enough to major pipeline hubs where high Btu content gas coming from LNG supply sources other than Trinidad is not an issue as it is with the Elba Island, Georgia, Cove Point, Maryland, and Everett, Massachusetts, LNG terminals.

There have been several key LNG developments for Cheniere in the past few months. Most recently the company filed for the Freeport terminal with the Federal Energy Regulatory Commission (FERC) and could make its next filing with FERC to build a second LNG facility early next year.

Given the number of developments on the regulatory front in the past six months, Souki expressed confidence that at the very least one of the four terminals could be authorized and built by 2007, citing a streamlined permitting process for offshore LNG receiving terminals by the Coast Guard, which gained jurisdiction from FERC in November, and FERC's decision in December to allow the construction of proprietary receiving terminals (NGW Dec. 23, '02,p1).

However, the Cheniere terminals would not be proprietary. "We have no intention of getting into the LNG chain as other than a terminal operator," said Souki, leaving the production, liquefaction, shipping, and marketing side to its future customers. "We are currently talking to half a dozen potential customers and expect to have one lined up for Freeport soon," said Souki. He declined to name specific contenders.

A further indication of how seriously Cheniere is taking its commitment to LNG can be seen in its recent decision to change its American Stock Exchange listing to LNG, from CXY.

--Madeline Jowdy

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To: Ed Ajootian who started this subject6/9/2003 4:55:00 PM
From: Ed Ajootian
   of 112

We will be riding the Natural Gas CrisisWave in many ways over the next 12 to 18 months. One of the best ways right now is in a small gas exploration company that is just plain 50%-80% undervalued versus normal valuations. This mispricing happens many times in the microcap world and ATP Oil and Gas Corp. (ATPG) is my current favorite.

ATPG looks to develop already-discovered offshore petroleum reserves not strategic to major or exploration-oriented oil and gas companies. Essentially, ATPG takes on projects from the major energy companies that are big for ATP, but way too small to make a difference in a major company. My great contact in the gas patch led me to ATPG as a great example of this type of company that is publicly traded.

The following is great example of how it all works from a Wall Street Transcript interview with Philip J. McPherson of C. K. Cooper: “Say Exxon Mobil is out in the Gulf of Mexico looking for a 100 Bcf natural gas target and they only find a 25 Bcf target. To them that amount of gas will not make a major impact to their bottom line, and there are still liabilities. A company like ATP goes to Exxon and says, ‘We want to take over your platform for this project, and we’ll assume the plugging and abandonment liabilities associated with drilling, and we'll offer an overriding interest in what we produce.’ This means that Exxon can get 10% of the revenues until a project dries up.”

One important aspect to look at when evaluating a company like ATPG--other than its current projects and reserves--is the company’s cash flow. The reason for this is that cash flow ultimately affects what ATPG will spend on the next year’s projects. They can’t very well go exploring for new reserves if they don’t have the resources to spend on the search. And being a smaller company, it isn’t able to borrow a lot so it must depend on its cash flow.

Where’s all this going? Well, according to Mr. McPherson, similar companies to ATPG sell historically for 3 to 4 times cash flow. This year, my estimates have the company coming in with cash flow in the $70 million range, or about $3.50 per share in cash flow. With ATPG closing today at $5.33, the stock now trades at about 1.5 times cash flow. So, as you can see, APTG is an extremely undervalued stock.

This company should literally be valued closer to $20 than $5.33. If they have the success I think they will have this year and gas prices go to $7 this summer and $15 in the REAL gas crisis this winter, as I believe they will, the company could generate $100 million of cash flow. That makes it a $350 million to $400 million-market cap company--today it’s a $108 million company.

We’ll put a buy under of $7 on ATPG and will look to hold the stock for a year or more, where you’ll only have to pay 15% capital gains on the 200%-300% profits we anticipate.


From Changewave newsletter dated today.

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To: Ed Ajootian who wrote (71)6/11/2003 7:24:20 AM
From: Ed Ajootian
   of 112
Greenspan Touts Value of LNG as 'Safety Valve'
(Copyright © 2003 Energy Intelligence Group, Inc.)
Oil Daily Wednesday, June 11, 2003

WASHINGTON -- The US must look to the importation of liquefied natural gas (LNG) as a "crucial safety valve" to reduce high natural gas prices, Federal Reserve Board Chairman Alan Greenspan told US lawmakers on Tuesday.

While LNG has been touted by the natural gas industry as the next logical step in increasing US natural gas supply, Greenspan's testimony will undoubtedly give greater credence to plans to increase the amount of LNG brought into the US.

Doing so will allow US policymakers some time to examine more critically the key questions of natural gas and overall energy policy, Greenspan told the House Energy and Commerce Committee during a hearing on potential fixes for current high natural gas prices.

Those key questions include whether to open more lands to new hydrocarbon drilling or to maintain existing environmental moratoriums, the construction of a natural gas pipeline from Alaska or the Canadian Arctic and even to examine the policy questions surrounding the use of nuclear power.

Greenspan was called before the committee to address the reasons and the macroeconomic impacts of the high natural gas prices, somewhere in the neighborhood of $6 per million British thermal units (MMBtu). To solve the problem as quickly as possible, Greenspan returned to one theme only -- imports of LNG.

In the simplest of economic terms, the current high prices stem from the inability of North American natural gas supplies to meet demand. The problem for the US, said Greenspan, is that "rising demand for natural gas, especially as a clean-burning source of electric power, is pressing against a supply essentially restricted to North American production."

Greenspan sees the US LNG market becoming the same as the existing crude oil marketplace, which has fully embraced imports from international supply sources to make up for the shortfall in domestic production. The result has been a marketplace free of the volatility of natural gas and should be for some time.

He noted that natural gas futures prices show an increase going out to 2009, on a heating oil equivalent basis, from less than $12/bbl to $24/bbl, while oil futures show only a $4/bbl increase over the same time period.

As an example of how the worldwide oil market can overcome supply disruptions, Greenspan pointed to the response of US refiners to the loss of Venezuelan production by purchasing crude from other exporting countries.

Such flexibility is necessary for the natural gas market and depends on an expansion of LNG import capacity. Without it, "imbalances in supply and demand must inevitably engender price volatility," he said.

Currently, there are three LNG import terminals in the US -- located in Massachusetts, Louisiana, and Georgia, with a fourth soon to be operational in Maryland.

The Federal Energy Regulatory Commission (FERC) has begun efforts to increase the number of LNG terminals in the US by revamping its approval policy for terminals in December 2002 (OD Dec.19,'02p5). Moving away from an open access policy that required terminals to accept any shipper of LNG, the new policy allows proprietary terminals, which allows the terminal operator to more closely control the flow of LNG to the terminal with their exporting operations.

Numerous plans are in the works to construct new import terminals -- notably Sempra's Hackberry terminal in Louisiana, and Cheniere Energy's attempts to construct a terminal on the Texas Gulf Coast.

Other plans to increase LNG terminal capacity rely on placing the terminals outside US borders to avoid community opposition over security and environmental concerns.

These projects include AES' Ocean Express project, which would rely on an LNG import terminal in the Bahamas that would send gas through an undersea pipeline to Florida. Other companies, notably Marathon and Sempra, have plans to construct terminals in Mexico and use existing pipeline infrastructure to carry the gas to the US.

As the largest natural gas market in the world, a number of countries are looking to increase their LNG imports to the US, including Trinidad, Russia, and numerous Middle Eastern countries. In November 2002, Algerian Energy Minister Chakib Khelil signed a LNG accord with Energy Secretary Spencer Abraham where both countries pledged to take steps to increase Algeria's LNG contribution to US markets.

Christian Schmollinger

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To: Ed Ajootian who wrote (72)6/11/2003 3:12:32 PM
From: DELT1970
   of 112
What are your targets for MSSN, Ed? Thanks for it.

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To: DELT1970 who wrote (73)6/22/2003 11:25:32 PM
From: Ed Ajootian
   of 112
No targets, I just think its undervalued here.

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