first i thought the insider sales were pretty tame back when the stock was 41 and 44 so i did not have problems with that. it was public anyway.
i do have a PROBLEM with the reported average price for the natural gas for the quarter. the earnings press release states the average price for the 2Q00 ng was $2.44. ok let's do some simple math based on br's own public documents and the price open market ng in 2Q00. br's annual report states exactly the amount of ng hedged in 2000 at a price of $2.43. we know from many statements from company people that about 900 mcf per day of br's ng production was hedged, which is a little less than 50% (i think the daily production rate was 1,900 mcf (someone correct me if wrong) of the daily production on ng. to sort of support this a presentation on br's website to banc of america analysts meeting on june 22, 2000, states that the hedge number is 886 mcf at $2.53/mcf (i think that is right, but i am doing this from memory).
we know the price during 2Q00 was between $3 and $4+, so how could half the ng production plus the hedged ng production average price be only $2.44 average? i was very surprised no analyst asked about the average price of ng. if we are being told the true story on hedges, then something seems wrong with the $2.44 ng price. can anybody figure this out or does anyone already know the answer?
also the conf. call was weak. i cannot believe that we just heard about a 7% production curtailment during 2Q00 due to unscheduled downtime (read problems). hey management, the reason so many analysts asked you on the conf. call about "anymore surprises" is due to the surprises you dumped out today. br management must learn to be more transparent during the quarter. the next to last statement and question was good. the analyst told them what was not going right and asked whether bobby was planning to sell the company. i hope the company is in play. last year i heard that texaco was interested. br has a lot of ng that they don't seem to be able to get out at today's prices.
consider the difference between the Merc gas location and BR's production locations. This basis may explain part of the difference - also is Canada gas the same price as US gas? Also do they not have gas in the North Sea that may be priced differently. I do not understand when they quote $/mcf and if that is the same as $/mmbtu? Seems like they are the same only if BR's gas is exactly 1 mmbtu per mcf.
I recall seeing previously that the n. sea prices are under $2. I dont recall offhand what % of BR's production is N american vs overseas.
The "sky is falling" reaction to this earnings report is a good indication that there was a healthy degree of speculative money in BR as of late. I dont think the stock will be moving much higher anytime soon, but long term I still believe this is significantly undervalued.