Trico Marine Services (TMAR) Message Board

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Gold/Mining/Energy : Trico Marine Services (TMAR)

TMAR 22.41

0.0%

Nov 7 9:30 AM EST

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To: JZGalt who wrote (629)	7/31/1998 7:58:00 PM
From: jad	of 1153

OIL SERVICE SECTOR: The near-term outlook for the oil service sector remains clouded by ongoing supply concerns which continue to be exacerbated by Asia's economic malaise. Despite relatively strong earnings in the most recent quarter, a number of warnings for the out quarters due to the sustained drop in oil prices have triggered a rash of earnings/ratings downgrades. Crude prices for the second quarter of CY98 were on average 24% below year ago levels. But with the group having underperformed the S&P by about 41% year-to-date, much of the bad news has been factored in to the price of these stocks. And a number of small but positive developments have occurred over the past couple of months that point to an improved fundamental backdrop. They are:  OPEC reversed its ill-timed decision to ramp up production. After seeing the consequences of its actions - lowest crude prices in nearly two decades - OPEC moved to reduce production by as much as 1.2 mln barrels a day. If crude prices move below $14 bbl for a sustained period, further production cuts are likely.  Japan is finally moving in the direction of serious economic reforms. Though the country is unlikely to move as fast at reforming its economy as the west would like, the steps being proposed, if enacted, will provide the building blocks to a sustained economic recovery.  US Senate is considering adding nearly 28 million barrels of oil to the country's reserves. While not a huge total, it represents about 8% of the stocks held by US companies. Put simply, it reduces supply. Add to these factors, the lag effect of reduced exploration and the likelihood of a colder winter and the ingredients are in place for firmer crude prices by early 1999. While the group should remain on the defensive for the next few months, patient, long-term investors might want to do some early bargain shopping in this sector as stocks are trading at deep discounts to the market and their projected l/t growth rates. from Briefing

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