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Gold/Mining/Energy : Santa Fe International (SDC)
SDC 0.01000+5.3%Jan 5 4:00 PM EST
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To: Doug who wrote (36)12/19/1997 5:43:00 PM
From: Czechsinthemail  Read Replies (1) of 54
 
Doug,
It is the $64 question. Briefing.com had a write-up today that suggested a psychologically negative climate based on fears of OPEC overproduction, Asian economic weakness and the Kyoto agreement to reduce greenhouse gases reducing demand for oil, and falling oil prices causing oil companies to cut back on their drilling budgets. They discounted the likelihood of these events occurring with enough impact to make much of a dent in the earnings of drilling companies. They expect the drilling and oilfield services companies to be particularly attractive given their high rate of growth and expected earnings slowdowns elsewhere in the economy.
Meanwhile the fundamentals remain strong. Virtually all the drilling companies will report strong earnings. Among them, SDC should have higher sequential growth than most. SDC is one of the premier drilling companies, with good management and a strong balance sheet. Their strong international presence and expertise with harsh environment rigs give them an improved competitive position relative to other drillers.
I think the way to bet is that continued strong earnings will turn around the negative market sentiment and these companies will again become favorites. I'm expecting SDC and NE to show particularly strong performance among the offshore drillers. My guess would be a rally starting sometime soon and running through at least the next earnings release.
Good luck,
Baird
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