George:
I have to chuckle at "conventional wisdom" as it pertains to this sector. It was only ~9 months ago that conventional wisdom would have us believe that OPEC couldn't hold to quotas and that $15-$16 oil was all we needed to have the integrated oil companies start to spending for E&P again. We're now testing $27 oil, with some predicting over $30 oil. So much for conventional wisdom.
I'm placing a large bet that supply/demand metrics will prevail. Since all my positions are long (BHI, DO, ESV, FLC,FGH, GOU, HAL, NE, PKD, RIG, GASFX) I'm willing to wait for B2K. I don't believe in the inevitability of a price crash, with oil "settling" to the low $20's. World economies are growing with oil in the mid-$20's. To my thinking, no one knows what the price will be going forward. The majors and investors IMHO are making a mistake waiting for a "stabilized" oil price. Finally, as demand increases, and we draw down reserves, as supply lags, they're all going to rush for whatever rigs are available and have to wait on line (years) to have new rigs built to their specs.
Of course, if I'm wrong, I have my telecommunication stocks to bail me out. <VBG>
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