RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: Notes OILNVSTR is taking a very pessimistic stance toward LEG. LEG's debt/CF is only slightly
above 2 times. ( 443 / 215 ) using 2XH1 CF which is much lower than full year CF.
LEG carries a lot of debt because they are a very aggressive team that has over 2,000
wells to drill. They are executing a large drill program and hence require the debt. The drill
program gets larger as it proves to be ever more successful and hence they are emboldened
to take on ever larger drill programs. The faster they drill ( and have success ) the higher
the stock price will be. I do not want to see them cut back on a successful drill program.
The wells generate an expected rate of return of 75% on average and so far the wells are
exceding expectations. What can go wrong? Oil prices can go down, the proven drill program
could become less successful. However I am an oil investor and I want to invest in a company
like LEG that drills mainly for oil, has demonstrated success and is not well appreciated.
Companies that are cutting back their drill programs are doing so because they either have
been hurt on the gas side or do not have the large inventory of highly profitable prospects
that LEG has. Stock prices of energy companies are low in general due to low gas prices
and the temporary bottle neck created by the U.S. drillers. Generally all energy companies
have been tarred with the same brush. Now is the time to buy companies that have been
tarred unfairly. I BELIEVE IN LEG.