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: The Ox who wrote (80552)	12/1/2000 8:53:50 PM
From: SliderOnTheBlack	Read Replies (1) of 95453

Michael H ie: Cap Ex & Drilling levels related to OSX valuations... Michael; often I wonder if you disagree just for the sake of disagreeing or taking the opposite stance of anything & everything I say. Yes; I did misread Adkins statement - ie: $10 Oil vs. a $10 reduction from current prices; but the end result is nearly the same... a significant collapse in shareprices from present levels. <A drop from $33 to $23 wouldn't change most companies' plans to drill new wells. Would such a drop affect the OSX? Of course it would but I don't believe that's what Mr. Adkins was discussing> ... "you don't believe that was what Adkins was discussing" ? - that's exactly what he was discussing. He is a STOCK ANALYST - his job is to analyze the industry; be it the relationship of crude prices to drilling levels, or Cap Ex spending to earnings - as "it relates to shareprices" - period; that is all he discusses. He is not a commodity trader, an economist, nor a geologist; he is a stock analyst - he doesn't "pass gas" (pun intended) without relating it to stock prices... Also; an extra $10 per boe; would most definitely greatly change drilling plans for most E&P's. That $10 per boe is the differnece between exploitation and exploration in the budget of many of the independants. It is the differnce between acquisition & asset sales. It is the difference of paying down the balance sheet while simultaneously increasing, or maintaining Cap Ex spending ; or not.... $10 per BOE is a HUGE difference ! - nearly a 50% increase in the historical average price of Oil. Would anyone here greatly change their personal "cap ex" spending plans with a 50% increase in their salaries ? - hello people... $10 per Boe is "all the difference in the world" - period. - think about that... << "How those companies' stock prices will react to $22/oil, well, that's a whole other ball game.">> ... wrong; that is not a "whole other ball game" - that is "the" ballgame, the "only" ball game & the subject at hand. - and I reiterate; he is an idiot if he thinks there would be no negative effect in shareprices to a $10 drop in Crude Oil prices. Actually, that is allready a given imho; as that is exactly what the market is pricing in here and the primary reason for the selloff here imo - in addition to the external factors of the weak overall broad market & the Election Debacle. This market forsee's a $10ish Drop in Crude Prices due to a slowing US economy - period; and that is "the" primary reason for this selloff. The shareprices selloff well in advance of the ultimate correction in crude oil prices. It is not "today's" crude oil price that determines "today's" shareprices - it is the projected Crude Oil Price environment in 12-18 months that determines "today's" shareprices - along with the expected Cap Ex environment related to that crude oil price etc. As usual; we agree to disagree. PS: How's techland... anyone still alive & kickin' on Invest LTD ? ... please pass along my warm regards to Theo & Co(VBG).

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