Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: The Ox who wrote (50090)	8/31/1999 9:59:00 AM
From: SliderOnTheBlack	Read Replies (3) of 95453

Duhhhh - what a surprise - crude surges on OPEC news... OPEC can NOT step up production prior to us seeing a ''temporary'' speculative bubble - this is the beginning of a new era for the Oilpatch. If they do so prior to a ''bubble'' - they KNOW the Oilpatch Bears will take Brent to $15 overnight !!! this will be a ''temporary'' bubble - but, will be a substantial windfall to the small cap E&P's especially. Watch the Oil majors here folks - they have the correct read on this - no 'cap ex' audibles on the line of scrimmage here from them. They will NOT dramatically step up cap ex spending - they will wait for the bubble - and flow that windfall to the bottomline and they will then wait for the sustainability issue to be potentially answered when OPEC does step up production and then; they will see how price bands work and/or how the market reacts - and to what levels they take crude prices... when crude settles in around $18 - AFTER OPEC Raises production; THAT will be the start of an Oilpatch boom for the drillers & service companies... perhaps late spring 2000 ? It is - and shall remain - a producer's game here...no other subsector stands to gain bottomlinewise as much as the small cap E&P's who will dramatically repair balance sheets and exit this winter much healthier and with a cash windfall from the coming temporary price bubble that OPEC will have to create; using internally generated cash and not debt to spurn the new uptic in cap ex spending.... we have doubles, triples and some quadruples in the small cap E&Ps here on merely the return of historic multiple valuations to cash flow. XTO's CEO Simpsons table pounding for 6-8 x cash flow for year 2000 is NOTHING more than the return to the sectors historic NORMAL valuation multiple folks ! RRC will have $3.00 cfps for 2000 x 6-8 multiple supports a value of $18 to $24 today ! These companies ONLY need another qtr, or two to continue to shed debt and flow cash.... Micro & Small Cap E&P's - be there - it will be a historic upside ride - bank on it. PS OPEC is finally showing the benefit of American Universitities educating a generation of their best & brightest during the 1970's...they finally ''get it''. (VBG). quote.bloomberg.com ULLA ULLLLLA AHHHHKBAKKK ! Go Gas ! RRC CRK XTO OEI MEXP .... all looking particularly good imho. and RRC's short interest nearly rivals FGI's by the way.... squeeze's are a good thing - as Martha would say...

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