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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Tulvio Durand who wrote (20901)4/30/1998 3:00:00 PM
From: Czechsinthemail  Read Replies (2) of 95453
 
Tulvio,

While the deep drillers are in the best protected position by virtue of their long-term contracts and the strong continuing demand for deep water rigs, it isn't clear that they are the safest stocks. Many have appreciated significantly from their recent lows and carry higher PE's than shallow drillers. I like the deep drillers as predictable long term plays, but I think they may be vulnerable to selloffs based on the combination of lower oil prices and their relatively high PE's. The flip side of the story is how much of the good news is priced into their shares. Though the deep drillers will certainly move up as oil prices rise, they will probably not move up as much as shallow drillers and land drillers. To me, the balance between low current PE and higher appreciation potential for the shallow drillers makes them more attractive options for current buying. Of course, if they drop on fears of low oil prices reducing dayrates, they may become even more attractive.

Baird
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