RossA

Penn West Energy Trust: My $50 Price Target

PWE would be an excellent acquisition. I conservatively value 200mb/d at $15B, just about their EV. Plus they have $5B in tax pools which, for the right Canadian company, could be as good as cash. Plus loads of undeveloped land and an oilsands play. However, there are few Canadian companies that big.

Could a US company use the tax pools?

Chesapeake Boosts Forecasts on New Discoveries; Analysts Too Conservative

CHK's 2006 profit had huge gains from hedges: of the $3.61/sh, $2.17 were from hedges. Stripping these, I get $1.44/sh from normal activity and, applying a 50% production increase factor, $2.66/sh in '08.

Why Is Diesel More Expensive Than Regular Gas?

The market distorts this diesel/gasoline question by the way fuels are priced and taxed: by the gallon (or litre in Europe). By volume, diesel gets more mileage because it is heavier and has more energy. Once you commit to pricing by volume - but only then, diesel gets better mileage. This is compounded when there is heavy taxation by volume, as in Europe. This leads European drivers to prefer diesel since the taxes are then spread over more miles.

Next, refinery limitations come into play. Since the U.S. taxes less, US drivers prefer diesel less than Europeans. Refinery runs typically produce both diesel and gasoline; so diesel is shipped to Europe and gasoline to the U.S, In the latter case, it is ofter European refiners who ship gasoline to the U.S.

So I think the "let's dieselize" adhderents are not fully informed.