Daniel W

National Fuel Gas Heating Up

I'd be very interested to see your work on this one but am hesitant about leaving email details in a public forum. I just started a blog though--which is rarely visited! Could you post it there in the comments section on one of my NFG posts? The address is easy, just type my name then add .blogspot.com (my creativity knows bounds).

We do agree on much about NFG. While you can definitely tell that management is getting annoyed with the correspondence--a telling point in my opinion--the recent letter by New Mountain shows that their patience is wearing thin too.

One of the recommendations, to drop the poison pill, is important because New Mountain is basically limited from buying more--given their ownership of close to 10% of the shares (the point at which the "pill" is triggered).

From recent filings it appears that NFG has sold off some of their position, though they still own roughly 9% of the company. I'm looking forward to the next quarterly disclosure reports to see if Citadel increased their stake substantially again--and whether or not all of the recent drama has brought in any activist funds with significant shareholdings.

National Fuel Gas Heating Up

Enter your comment hereEOG is expected to drill 10 wells over 2007, and 250 in 2008 (in order to keep the joint venture active). Management said in the latest CC that this # can be revised up or down depending on results, and prices.

The value of the near-million acres NFG owns--approximately $50 per share if you use comps given to peers in the same play--ought to get priced in more and more as this data becomes available for market participants.

Personally, I'm not expecting a big move on the reserve report but there's no telling what the market chooses to do. Either way, NFG seems to have both good downside support and upside potential--with shareholders urging management to take a series of steps that would allow the value to be realized quickly.

Conclusion: there are worse companies to own. Thanks for posting this. I was going to right something on the news but you beat me to it. The only thing I'd add is that management's response to the letter by New Mountain and CalPERS was truly pathetic--if you can call it a response it all (as opposed to side-stepping nearly every issue raised).