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iShares Mortgage Real Estate Capped Message Board

  • edajootian edajootian Dec 3, 2003 7:59 PM Flag

    Puzzled Re: Downturn on Good News

    Now I'm puzzled here, the company seems to have kicked back into gear yet the stock is still languishing.

    I just listened to their latest hype show and its all pretty much good news, other than the reminder that they are 0-3 so far on their deep shelf wells this year.

    The stock is selling at a trailing EV/EBITDA ratio of under 5 yet they are increasing production at a 25% per year rate for '03 and all indications is that it will continue to climb similarly in '04.

    I'm tempted to buy some stock but wonder if I'm missing something. Anyone?

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    • Let's be real here, if it goes down big time we both lose our entire investment!

      Actually I paid $2, not $2.50.

    • Ed: If it turn down big time you would lose more $ on the 17 1/2 that you paid $2.50 for vs .50 on the Feb 20...Just curious...good luck as i bought the Feb 20

    • Could I have gotten them for $.50? I looked several times yesterday and the ask was at $.65 if I recall. Also the spread is so goddam large on the 20's, if things turn negative for some reason I would be nailed big time.

    • Ed; The company has had 19.7 millon expense for dry holes YTD; 7.4 mill in 3rd Q alone. Thats the only "negative" I notice.

      Positives are 1) very favorable hedges going forward 2) .33 Debt/equity 3) 1.7 CR 4)reasonable production costs 5) Xcellent product prices 6) sells 3.6x est '03 cf 7) 11% sequential prod. growth (34% since 1st Q)

      Here is an interesting fact: TMR had 8.3 bcfe 3rd Q, 30.5 mil total CF or $.39 CF/share; REM had 9.53Bcfe production, $25.8 mil CF or $.92CF/share. Similar companies production wise. Big difference in share price based on dilution of TMR shares.

      I like MHR, REM and WZR. They collaborate in deep water GOM. MHR looses its terribly onerous hedges in 3 weeks which makes it more attractive to me than previous.

      • 1 Reply to peachpitter
      • Thanks peachpitter, very helpful comments.

        3 of REM's wells that are due to hit TD soon are deep shelf wells and one is targeting a massive salt dome structure onshore Mississippi. These wells are targeting about 175 BCFE net unrisked reserves. If REM hits 2 of these and misses on the other 2, any thoughts on how the market would react? TIA

9.82-0.010(-0.10%)May 2 4:00 PMEDT