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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Big Dog who started this subject	5/1/2002 8:09:04 AM
From: Big Dog	Read Replies (1) of 206161

RBC Capital: OIL SERVICE STRATEGIST: MAY 1, 2002 Commentary * The OSX apparently has stalled out temporarily near the 107 level. * In our view, the second phase of fundamental improvement in the oil service sector has arrived. * Phase one was Gulf of Mexico drilling and phase two is surfacing in the U.S. land drilling business. * In addition, it is becoming clear to the staunchest of natural gas bears that U.S. production is declining, not increasing, on a sequential quarter basis. * The most recent evidence comes to us courtesy of BP, which reported a 1.7% sequential decline in U.S. natural gas production. * This supply drop in conjunction with rising industrial demand suggests to us that natural gas prices should remain north of $3.00 per Mcf and E+P spending is about to hit a positive inflection point. * The primary risk factor is a double-dip recession in 2002 and/or oil driven fuel switching. * As such, we believe it is only a matter of time before investors put incremental capital to work in the group. * We maintain the view that the OSX will reach 115-120 in the near term.

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