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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Thean who wrote (5301)12/16/1997 12:46:00 AM
From: Czechsinthemail  Read Replies (1) of 95453
 
Thean,
Thanks for your detailed post. I think there is a good chance for a rally, simply because the sector is so heavily oversold, but I have much less confidence in my short term predictions than in my big picture forecasts.
As for the e&p budgets, I think they remain strong. You may recall the Chevron exec saying that drilling dayrates amount to pennies in the overall picture of their exploration budget. As long as the rig situation is tight and their is overall profitability on the drilling, they will keep it up. I think the problem is that many investors, including fund managers, ASSUME that the higher dayrates will be prohibitively costly and will deter drilling. I think the only thing that will result in a significant cutback of drilling is the prospect of significantly lower oil & gas prices for a prolonged period of time. So far there is no indication of that, so drilling continues and dayrates remain strong.
Baird
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