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: Wowzer who wrote (67246)	5/28/2000 1:49:00 PM
From: SliderOnTheBlack	Read Replies (1) of 95453

...love that Barrons article; this item stood out: <<"We're just at the beginning of the spending cycle," Baskir declares, noting that exploration and production spending hit $84 billion in 1998, the top of the last cycle, compared to an expected $65-$67 billion this year.>> The 97 -98 spending cycle saw the largest offshore rig construction program in history in those comparable figures. The Newbuild subsector according to the Oil Majors & the Drillers - will not see anywhere near that degree of spending in this cycle; so that means that there will potentially be a mind-boggling revenue increase for the "traditional" service, mfg & const co's. Equipment manufacturers like CAM WFT VRC,the pureplay pipe/tubular co's like MAVK and the engineering & construction leveraged co's like HAL WG, subsea players OII CXIPY SCSWF BWG, the offshore pipelay service & const co's like HOFF GLBL and especially the small cap players like UFAB GIFI NR will really be ramping soon. Offshore drillers as opposed to the land drillers who have allready made their major move;also will be entering their dayrate sweetspot - FLC stands out very strong here with the most upside leverage to dayrates in the GOM. An earlier article here stated that part of the NG crisis was due to the lack of drill-ready sites in the E&P portfolio's - given that statement;the seismic players like VTS & PGO should be entering a strong updraft as well. Timewise - averaging into any weakness seen here going into the Fed meeting - but prudently saving some cash and all margin for both defensive & offensive possibilities makes sense. We potentially could see some tremendous bargains if the overall market sells off sharply on another .50 bp Fed Hike in June - or, even a macro event for the sector such as OPEC raising production. It would really be a gift to be able to load up one more time into a post Fed meeting selloff - leveraging some plays at OSX 105-108ish levels; just prior to the Q2 earnings reporting ! I'd imagine that Q2 earnings reporting will really show some nice upside across the sector - especially for the GOM offshore drillers as it appears dayrates are ramping late in the quarter here. The time may also have arrived to buy the 2nd & 3rd tier and small caps; as there is some compelling upside to their prior cycle price & valuation multiples. These companies will be most upside leveraged to this coming cap ex spending windfall. Still time to exercise some patience and keep substantial powder dry as the the risk of a Fed Meeting and/or OPEC production increase selloff is still there. The opportunity in the short term here; is to avoid being leveraged into an overall market pullback - that just wipes out capital here in an exponential manner and then being able to step in with some real significant, leveraged buying firepower into "that" selloff - being able to walk in calmly and cherry pick the meat of the bones - is what I am lying in wait for. Patience & restraint are trading/investing virtues; we'll see shortly if they pay off... PS: here's another interesting post on SI about "Trading & Trading Psychology - patience & discipline etc...: Message 13788907 Patience & restraint... those who can exercise it here will flourish; because so few can.

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