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Politics : High Tolerance Plasticity

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To: Think4Yourself who wrote (1311)	3/10/2001 8:09:40 PM
From: Sharp_End_Of_Drill	Read Replies (1) of 23153

JQP, my take is the article is pretty accurate. The industry has always gone after the lowest lying fruits, which means those being gotten now in relatively shallow water on the shelf are fairly small. The same is/will happen in deepwater. Right now deepwater is very snazzy, and had a good deal of glitter. Shell and others hitting huge reserves in the GoM serves to reinforce the belief. However, the wells being drilled now are the deepwater low lying fruits - the huge structures that stick out like a sore thumb on seismic. After a few years the rate of un-economic fields and dusters will increase and a number of companies will get a very expensive deepwater education. All these factors point to continued struggles to find enough gas. I believe we will eventually through continued high rig counts, and large LNG projects - but there are several more years of boom left. But, I think we need to be cautious. Our JIT management of inventories means we go from shortage to glut overnight, with very small real changes in physical delivery. What's going on with Japan's depression - and the risk of another Asian contagion has me quite cautious. The energy bull story is still there - just like it was in late '97 and '98 - but it might get temporarily covered up by our own recession and the rest of the world's financial woes. I'd suggest more caution than the good signals would otherwise indicate. If we do get another osx stock price collapse out of the worldwide economic situation it will be another set up for portfolio slam dunks. The issue is to weigh the risks of being cautious now and possibly missing out of some more run versus the chances of another '98-esque collapse - to ensure you've got enough capital to clean up in either scenario. Sharp

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