.....On top of the oil price news were changes in the "Stars
Status" of a few oil service and drilling companies by
Standard & Poor's analyst Norman Rosenberg. Ensco
International (ESV:NYSE), Rowan Companies,
(RDC:NYSE), and Halliburton (HAL:NYSE) were all
demoted to "Falling Stars." All three stocks took a hit: HAL
fell 2 to close at 45 7/8, ESV fell 1 9/16 to close at 29 3/8,
and Rowan dropped 1 to close at 26 5/8.
"The idea was to become more selective in the drilling area,"
Rosenberg says. He like companies such as Noble Drilling
(NE:NYSE), which "doesn't always get its due," and Global
Marine (GLM:NYSE), "one of the premier rig companies."
Noble fell 1 7/8 to 25 5/8, while GLM fell 1 1/4 to 22.
Sellers on Tuesday were not discriminating, hitting
equipment and seismic companies as hard as the drillers.
The startling thing Tuesday was the selloff's initial swiftness.
Not more than 10 minutes after the open, Marine Drilling
(MDCO:Nasdaq) was down nearly 10%. By the close, it had
recovered slightly, down 1 7/16, or 7.8%, to 16 7/8.
"Most of the price reduction today is based on market
speculation about what is going to happen," Danny
Richardson, vp of marketing of Marine Drilling, said early
Tuesday. He said oil prices would have to go down and stay
down long enough (how long is long? two months to six
months or maybe more) to affect the plans of any oil
companies. "It's too early in the year to be making any
change in plans," he added, referring to oil companies.
Mitcham Industries (MIND:Nasdaq), written about in TSC
last week, was off 2 3/8, or 13.2%, to 15 11/16.
Volatility in oil and gas prices is part of the business, and
you have to run your business strategically so short-term
volatility has few effects, says Bruce Vincent, a senior v.p.
at Swift Energy (SFY:NYSE), an independent exploration
and production company focused on natural gas. Swift said
the downtrend in oil prices has not influenced their current
thinking on their '98 budget, which is presently at about a
10% increase from the $135 million they spent in 97. . |
