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: SliderOnTheBlack who wrote (55437)	11/26/1999 12:14:00 PM
From: Crimson Ghost	Read Replies (2) of 95453

OSX versus E&Ps -- Another View There is no question that the E&Ps are much cheaper than the OSX based on the short-term earnings outlook for these groupings. But that is not the whole story. Everybody in the energy industry "knows' that current crude oil quotes in the $26-27 range will not last much longer. A drop back to the low 20s is just a matter of time. So the E&P earnings probably are at or near a peak RIGHT NOW. And peak earnings usually do not get high multiples (tech stocks excepted) OSX earnings -- while depressed right now -- will rise much higher over the next 2 years, although there is wide disagreement over the pace of improvement. And this is so even if crude drops back to the low 20s. Bottom line -- the OSX is just beginning a major cyclical rise in earnings while the E&Ps are at or near a peak right now. Stock attraction can also be gauged by comparing current quotes to previous cyclical peaks. And the OSX comes off much better by this measure than either integrated oil companies or most E&Ps.

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