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Strategies & Market Trends : Value Investing
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To: Archie Meeties who wrote (9689)1/20/2000 10:23:00 AM
From: jeffbas  Read Replies (1) of 78702
 
I must not have made my point clear on PETD. The majority of their revenue apparently comes from conducting drilling programs, not from sales of energy for their own account. Therefore, they do not materially benefit DIRECTLY from an increase in energy prices. They might materially benefit indirectly, if the price increase was perceived to be long lasting and resulted in increased interest in their drilling programs. However, if long-lasting higher prices were in store, why not own an energy company almost entirely exposed DIRECTLY to those benefits?

As far as my comment of being interested in companies "with oil exposure" you answered with the typical polemical trick of responding as if I had said ENTIRELY oil exposure. In my opinion, some oil exposure is desirable and the duration of the benefit can be extended by selling futures contracts against future production. Even if "backwardization" reduces the benefits of hedging over time, the benefits are usually still positive.
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