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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: John Carpenter who wrote (3980)11/30/1997 2:34:00 AM
From: Steve Childs  Read Replies (1) of 95453
 
I love this current 'bear' market in oil drillers. I hope it drives CDG to $45, FLC to 27, PDE to 20, KEG to 22 and so on. It is creating the buying opportunity of the next three years. Let's say OPEC raises output by 10%. Since they produce 40% of output, that will theoretically decrease price by 4%. At $18.50 per barrel, that reduces the price to $17.75. Increased output of the rest of the world will decrease it another $.75, so we will end up at $17 per barrel. To my thinking, that will ultimately raise the oil drillers 50% from the lows they are about to see in their stock price, as opposed to 75% we could have seen at $19-21 a barrel. Aside from these cycles, the oil drillers are golden.
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