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AG Edwards Downgrades Amerada Hess to 'Sell'


AG Edwards downgraded Amerada Hess (AHC) to sell from hold.

On Thursday the company forecast a 9% drop in 2003 oil and gas production vs. 2002 levels. Analyst Bruce Lanni says despite management's recent success in Equatorial Guinea, he thinks several known issues (including a production drop forecast) may continue to be an overhang on Amerada's share price.

Lanni says he's concerned about high operating costs associated with the acquisition of the Gulf of Mexico assets of LLOG Exploration Company for $750 million. He's also concerned about development projects in Equatorial Guinea; its above-average exposure to an increased tax rate structure in Great Britian; and the possibility of future disappointments given the company's aggressive targets.

Despite a recent sharp sell off, Lanni thinks the 10% downside may still exist.


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