Replies to post #29545 on Phoenix Associates Land Syndicate (fka PBLSQ)

[Han2004fl]

yep... that is what I understand as well.. they are just the middleman whose profit is guranteed.

[PUNTANG]

Interesting Business Week article on natural gas sales. This business seems very similar to our ProGas business strategy. This guy basically sells at the well head to reducing price to the buyers while making a nice profit for himself. I believe this is an innovative approach and PBLS has figured it out too.

http://www.businessweek.com/magazine/content/06_47/b4010081.htm?chan=search

An excerpt from the article:

For one major manufacturer that was unhappy with its hefty natural gas bills, Headlee suggested it threaten to bypass the supplier and build its own tap into the interstate gas pipeline. That shrewd ploy prompted the utility to slash its delivery rate from 68 cents to 9 cents per million cubic feet of gas.

[LowFloatGoat]

Thanks Ted. Does progas provide a hedging service as well? I know they spoke of derivates in one PR. Maybe kind of like the local co-op for midwest grain farmers? The farmers sell their grain to the local co-op then the co-op markets the grain to foreign countries, livestock feed companies, soybean oil companies, etc. The local co-ops also provide a hedging service for farmers that want to lock in a future price for their grain. The farmer sells part of the crop forward with a forward/futures contract and the co-op charges a fee for brokering. Sound familiar?

[notime2wste]

tedwitt

So why is PBLS concerned with the price of the gas going up or down? It shouldn't matter. Profit should be locked to the number of producers selling a set quantity of gas (at a predetermined markup). The price of the gas is irrelevant because they're selling a commodity. Nothing progas does will change the price of gas.

There's something that either nobody understands about their business model or they're being intentionally veiled about.

With regard to Enron, $500k loss doesn't make any material difference to a company that has net profit of 20.6 million (or whatever comparable profit they had during that year). That's 2.5% of profit. However if "net pretax revenue" is what they're actually netting 10% of, they're losing 25% of profit.

Look, I'm not trying to bash pbls and certainly not you. Your DD is invaluable to the board. I'm just looking at facts that don't seem to add up. I email Ron once in a while, and his tone is reassuring (hold and buy more if you can) but not really as detailed as a serious investor would expect.

No time