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: Rob Shilling who wrote (63214)	3/28/2000 11:10:00 PM
From: jim_p	Read Replies (3) of 95453

Current demand is closer to 78 MMBPd not 77 MMBPd and growing at a rate that no one projected as early as a year ago, but the real story is NG. The twelve month strip for NG is now over $3.00. Expectations are for demand to exceed supply THIS year, despite 80% of all drilling going for NG. NG will spike up to $10.00 this winter. Long term planning for the majors are working on NG projects today that can not be justified without sustainable $3.50 to $5.00 long term NG prices. If it doesn't get any better than that, demand for oil will exceed supply buy sometime NEXT year. The current price of oil is a function of inventory, which is not going down any time soon. And better yet, any one of three OPEC members can currently dictate the price of oil on their own. Inflation will soon be showing up in the statistics. The next fed rate increase is more likely to be .50 basis points and not .25. In 1978, oil and gas stocks represented 10% of the S & P 500. That number increased to 30% at the peak in the oil cycle. Tech stocks represented 10% of the S & P 500 just a few years ago, and is now in excess of 30%. What do you think the percentages will be in two years? We have not begun to see rotation, but when it comes I plan to be fully invested and on margin. This is as good as it get in the oil patch, and it hasn't been this good in over 30 years. Record earnings will start to show up in several weeks. Consolidations will continue for several years to come, which will further enhance future stock valuations. Jim

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