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: Crimson Ghost who wrote (55343)	11/24/1999 10:30:00 AM
From: SliderOnTheBlack	Read Replies (2) of 95453

API Drawdown - 300 M BOE Benchmark looms very close... We had positive API's once again. The headlines should be screaming about days of usuage in supply, we are nearing dangerous levels. SSB had a nice commentary about it being much, much too early to write of winter demand regarding the Nat Gas story. Regardless of "winter weather" - the story for the balanced producers is that merely with $20 crude; they have tremendous upside here going forward. This upside has been completely discounted here. The Street is completely ignoring both crude prices and the underlying fundamentals here. We have E&P stocks at fractions of their 97-98 cycle valuations. The mid-large cap E&P's with good exposure to crude production are tremendous opportunities here. The fundamentals of global growth and continued supply drawdowns - totally excluding any Y2K speculation, or events; supports E&P valuations much higher than present shareprices. Even VPI whom has - NO, ZERO, NADA - crude hedges in place, with increasing production, a new credit line etc - is still nearly 30% lower in sharprice than it was last October with $12 Oil - and this is a heavy Oil producer ! Balanced producers like UPR PXD OEI are screaming buys. Obviously the greatest buying opportunities are when sentiment, or interest are at their lowest points. This spells opportunity here as the overall market focuses on the NASDQ/technology sector and the recovery in the DOW. We will see "sector rotation" once again. The Inflationary pressures can not be ignored, the emergence of speculation of another rate hike will have money once again scrambling to the oilpatch. The biggest story is that we are steadilly heading toward a penetration of 300M boe in US storage. When that happens - we cross a point of no return. The stage will be set (regardless of any Y2K effects) for a speculative bubble in crude prices. We are reaching a divergence of historically high crude prices - which very, very importantly are clearly supported by supply & demand fundamentals; and yet have historically low valuation multiples on theses E&P's. This can not and will not continue. This spells opportunity to those who are willing to venture headlong against the grain. The Street will ultimately catch up to the story. Sometimes you must trust the numbers and the story regardless of what the tape is telling you. This is the time to do so and those who do will be richly rewarded imho. Buying UPR PXD OEI FST NBL here... fwiw; waiting on VPI NEV BR - getting close.

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