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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Winkman777 who wrote (71392)8/22/2000 5:32:22 PM
From: The Ox  Read Replies (2) of 95453
 
Winkman,
There will be a dangerous game played out by many companies(and their CEOs) in the near future and it may end up being their eventual downfall. This game is called "expecting $20-$25+ oil prices". I say this is dangerous because as we've said many times before on this thread (and most recently reiterated by Shell's CEO) that expectations should be for $18 oil prices. Hey, if it turns out that oil stays in the mid 20s for a sustained period, all the better but to discount that $18 oil is possible is also a huge mistake!

Companies who COUNT on $20-25 oil and hype their company's future based on $25 oil will be setting themselves up for trouble when $18 oil arrives, and IMO it will arrive. Those same companies will have to eat some serious crow when they can't create the shareholder value that so many will expect due to these lofty expectations. I've recently read HEC's CEO's comments based on their potential reserves and I was immediately concerned by his continual use of $25/bbl prices as a valuation metric on reserves.

We've come so far from the dark days at the end of 1998 and beginning of 1999. We should never forget where we were back then and how we got there!

JMO,
Michael
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