Interesting comments from Bob Bowker.....
>> So, how did everyone do in this sector this year? Following is a brief assessment of the what happened in the last 12 months.
For openers, September, October, and November weren't much fun, but Fidelity's Energy Service Sector Fund, FSESX (see link above), is up about 50% for the year -- eat your heart out, techies. Where was the leadership in the sector? SLB, HAL, CAM, SII? Nope. A quick comparison of stock performances of the various, key, sub-sectors shows that the land drillers were the ones that uniformly beat the FSESX Fund. Of the 8 stocks that we follow in this sub-sector, 7 of them out-performed the FSESX Fund ---NBR, PTEN, PKD, GW, UTI, SESI, and KEG. Only the Canadian driller, PDS, fell short of the FSESX. The point made in the article that we cited yesterday, about the land drillers being perceived as natural gas-driven stocks (which is true), probably had a lot to do with this sub-sector's performance this year.
However, the offshore drillers were almost as consistent in failing to match the FSESX. The lack of big new spending programs by the big oil companies explains why the deep-water, oil-driven drillers like RIG and DO have been laggards, but wait a minute. The shallow-water drillers are also dominantly focused in natural gas exploration. Yet those shallow drillers -- NE, RDC, MRL, ATW, and SDC -- all under-performed the FSESX. ESV just matched the index, and only FLC and PDE out-performed FSESX.
What about the majors -- they must have been the key performers behind the 50% rise in the FSESX. Wrong. The majors were evenly divided. BHI, BJS, and NOI beat the Fund, SLB, SII, and VRC matched the Fund, and HAL, CAM, and WFT under-performed.
It will be interesting to see how these stocks do early next year, when the heating season ends and warmer weather puts pressure on both oil and gas prices, and later in the year, when (and if) the economy recovers, OPEC cuts production, and the E&P companies invest this year's profits in new drilling projects. Isn't this a fascinating industry?? <<
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