Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Czechsinthemail who wrote (15042)	3/17/1998 12:28:00 PM
From: Broken_Clock	Read Replies (3) of 95453

Baird, The very long term outlook for oil is nothing but bullish...but consider this scenario(which could be reality IMO). As the world economy shakes out the marginally prosperous countries(2nd tiers like Venezuela, Saudi Arabia, Nigeria) that have only one industry(oil) they will be forced to pump oil as fast as they can in order to stay off an "Indonesian" melt down. See Thean's post and Bernardo's as well. The "Chaostan" scenario as developed by Richard Maybury is playing out...the key is in the timing. LT may well be right that march will see the oil lows for the year. $10 oil that we laughed at a month ago is now looking like a reality. My question is this...What does sub $15 oil do for the drillers? Yes, the deep waters like RIG & DO will do ok...but the euphoria of ever increasing day rates seems to be dissipating. Flat earnings growth is not what gets Wall St. excited. Even GLM stated that sub $15 oil would be detrimental if it stayed for 6 months. This is looking like a real possibility now. To sum it up, this is a bear market in the OSX right now. How long it lasts remains to be seen. When the Saudi, Venezuelans, etc. begin to run out of oil that can flood the market then the reality will hit home in a firestorm. That may be a few years away. If the world enters a depression era like SE Asia then oil may be cheaper to find as labor costs drop. Seems like some unanswered questions out there. Thr most bullish scenario is LTs, where the sector rebounds in the summer. I'm not hearing that from any analysts(even Simmons & Co. had nothing to say today). Can someone provide some good news? I need it. PK PK

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