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Non-Tech : Lufkin Industries (Nasdaq: LUFK)
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To: Steve Hufnagle who wrote (46)3/23/1998 3:39:00 AM
From: Todd D. Wiener   of 103
 
Actually, the price of crude has jumped to $16 per barrel. The oil service, drilling and equipment stock should do well Monday. LUFK may actually breakout and resume its uptrend. I'm buying calls and selling puts on PTEN, NSS, CDG, KEG & MAVK.

You're correct that oil well drilling is a strong leading indicator of pumping unit demand. Oil prices are leading indicators for oil well drilling, too. So as long as the price of crude stays above $14, drilling rates shouldn't be affected much, and LUFK will continue to experience strong demand for its pumping units. Another factor driving demand for LUFK's pumps is the replacement market for old, worn-out pumping units. A lot of these units are 15 years old or more. About 16 years ago, as the oil bubble burst, there was a tremendous amount of oilfield equipment capacity. As these machines need to be replaced, LUFK will benefit.

Todd
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