Most independents are flush with cash today and many don't know what to do with it. Prices for North American assets are at an all-time high, averaging some $2 per implied thousand cubic feet equivalent (Mcfe) of proved reserves recently. And, prospects are few, at least when evaluated on what may be old price decks such as $18 oil and $2 gas. Houston-based multinational Pogo Producing Co., for example, has a spare $2 billion. It's considering buying back stock-lots of stock. Another option that has been suggested for producers that are fat of wallet is to pay a special dividend to shareholders. These ideas improve shareholder returns, but neither boost reserves nor production in real terms. With $2 billion of cash and nothing compelling to do with it, where's the harm in overpaying for assets? What would be worse? Here are some bad ideas: • Buy a dot-com. • Buy Eckerd. It's for sale. Incorporate it in your employee-retention program: free prescriptions. • Take all employees, and their families and friends and neighbors, to Disney World. • Heck, just buy Disney World. Rename all the rides for your favorite discoveries. Change "Epcot Center" to "EBITDA Center." Produce some new shows-"The Little Mermaid: Deep Water" and "Finding Nemo's Prehistoric Ancestors" and "Freaky Friday Markets." • Take up some Libyan oil concessions and drill into a secret underground weapons plant. • Create a toll-road authority. Name it "Heaven." And then convince a state legislature that the road to heaven should be a toll road. • Invest in black-velvet art. • Buy 49% of a Canadian royalty trust. Re-incorporate yourself in the Caymans. Sit back and collect the tax-free distributions. • Make the maximum contribution allowed to every Socialist candidates' campaign across the U.S. • Get Andy Fastow out of jail. • Hire Andy Fastow. • Take Anna-Nicole to dinner. • Buy proved gas reserves from Shell offshore Australia. • Defeat the oil industry aging trend: send all employees off for Botox. • Build another downtown Houston office building. Name it for yourself. • Buy the naming rights to a sports stadium. • Launch an energy-trading business. • Invest in the bovine-methane business. (See "NewsWell" in this issue for more details on this.) • Launch an exploration program offshore California. A better idea could be sending 1,000 high-school students to college to study a petroleum field and getting a five-year employment commitment from them. Or, buy stranded gas fields overseas, build a U.S. liquefied natural gas (LNG) terminal and commission construction of a dozen LNG tankers. But for many producers, the best ideas may still be to fork over the implied $2 per proved Mcfe for North American assets, and change in-house price decks when evaluating asset purchases and prospects. E&P stocks are fully valued these days, so buying back your stock would be at a market high, just as it would be to buy other producers' stock. Without many prospects of your own to grow your reserves and production, the other producers' stock may be a better investment choice. The worst thing that could happen is using your fully valued stock to buy another producer's fully valued stock, and then later, when there is reduced market interest in E&P shares, having a lower stock price but twice the reserves and production. Kerr-McGee Corp, EnCana Corp., Pioneer Natural Resources, Chesapeake Energy, XTO Energy and others are rolling the dice. Unless you change your price deck, where will your company be when oil is $24 and gas is $3.50 again? Of course, going to Disney World would be more fun. -Nissa Darbonne, Executive Editor