Dodge,With some resignation I agree that there is no chance of a...

Dodge,

With some resignation I agree that there is no chance of a WPL takeover of HDR in the next two years. WPL are struggling to raise funds for their US acquisition. Taking a bite of a capex hungry small cap like HDR would give their shareholders indigestion. Also, they neglected to pick up more than a blocking stake in HDRs recent undersubscribed issue @ 70.

As for your question about tossing 4 heads in a row, the answer is the same as if you tossed 1000 heads in a row. The chance of the next toss being a head is one in two. Prior results have no influence on future results in games of chance. Thon is a bit different, prior results DO influence future results. With 4 oil strikes, it shows the region could be a prolific producer and this increases the POS on Thon. Shell drilled the tail end of Thon and found oil back in the 70s, so I think the chances are excellent.

I think the day traders have been shaken out of the stock so market reaction should be muted to Thon whatever the result. HDR will probably drift around current levels for several months until the hype into next years drilling program begins early next year, but these day trader driven price increases will never cause a sustained rise, unless accompanied by a general bull market. This is also possible, October is historically when bears turn into bulls and the US is due for a big rebound.

Long termers need to be patient. When production starts in 05 the stock can be revalued on an unrisked NPV basis and the fund managers will move in. I expect HDR to be north of $2 by then, but the intervening movements are impossible to predict. I once argued with Yogi that the 3d seismic has more influence on HDR that Yogis astrological charts. I am no longer so sure. It seems that market spirits have more influence on HDR than oil reserves given the astonishing market ambivalence towards this years strikes.

In the long run, whatever happens at Thon, this years drilling program has been a great success and as a long termer I'm more interested in what happens in the oil patch than the vagaries of the market. As Warren Buffett said, the stockmarket is a tool to enrich the patient at the expense of the impatient. 5 years waiting have rewarded me well. I am patient.


Ching