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  • snogreen snogreen Mar 28, 2006 9:46 AM Flag

    down $1; lost $38 mill

    Just about like I figured. EPL would be down a buck or so. IMO? This news about dry hole was out to those in the know a week or two ago. It was PAST TENSE that they had already plugged the well. So the hot money knew and sold us down a week or so ago. All in all I think EPLS's share of the expense of the well was somethng like $6 million? And they took out $38 million in market cap?

    I agree ith the other poster that the denali well was a company making well, it was not a company breaking well. So they lost a gamble on $6 million.....their budget was something well over $300 million. Lots more wells to go. And I bet that EPL has other well data on teh back burner to release soon that may be better. EPL still reasonably priced....prices getting stronger.

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    • See message 2171

    • I was replying to a previous post that indicated that the price of EPL was driven down a couple of weeks ago becauase someone knew about the closing. I'm not saying it is true. I'm trying to ask the original poster what he thinks since he posted it.

    • 'what does that say about the integrity of the Co.' Sounds like strong negative words that a casual reader could take in the wrong way. A delay of the pr about Denali is also just your opinion and you should say so.

    • This may sound a bit juvenile but if there was insider trading, isn't that considered illegal insider trading ? If the company capped the well weeks before they released the news and the insiders took advantage what does it say about the integrity of the company ?

    • when wall st street wakes up and starts giving North American O&G producers a reasonable valuation (which in EPL's case is north of $28) this country will be less dependant on foreign sources of energy as knocking $38mil off mkt cap on an $8mil loss is ridculous, unfortunatley wall st hates energy but until they change their view we get to but cheap O&G producers in the face of high O&G prices.

      These gulf or mexico producers are arguably the most important of North America's energy complex.

      Tommorrow's EIA oil inventory report will be an eye opener as you will see how reliant we are on foriegn imports of crude.

      I am expecting 3-5milbbl draw of the total crude complex (includes gasoline and heating oil)

      • 1 Reply to runthapipetmr
      • Issue in stock price is not the $8M, that is a drop in the bucket. Issue is that there was some upside built into the stock based on a percentage chance of success (% of big buck potential from huge reserves if the well hit). We're real lucky that only a $38M hit to market cap occurred (stock rallying a little from that).. This is very positive to the stock. Put another way, do you really believe the stock would have gone up only $8M or $38M if Denali hit? If this were a biotech, no one would be measuring the way your post did. Be happy and relieved at this modest downside reaction.

    • On a 8 mil lose price should have droped about .20 per share . Will be back to 24.00 this week .

      • 1 Reply to enterprise1950
      • long EPL. The $8M cost to drill vs the market cap drop is not the issue. The street factored in a percentage value of what the well would be worth into the stock price. Dry hole means that value came out.....Recent hiring of the new guy to head drilling and exploration from big oil was meant to lend some future credibility to the company's drilling programs - anticipating that the street would not like Denali result beyond the fact it is a dry well. Problem is that lots of drilling is under way and the new guy can't affect that, his benefit may be in the distant future if at all. It is like hiring a new coach at the end of a season when the roster is full and so are future recruits....expect a hit to the stock and gradual recovery based on price of gas (existing port folio of reserves). Significant rise occurs only on big hits being annonced - several to add a multiplier justified by increased confidence in what it is doing.