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Strategies & Market Trends : Z Best Place to Talk Stocks

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To: Larry S. who wrote (16193)	9/9/1998 12:38:00 AM
From: pz	Read Replies (3) of 53068

Chat Oil Services- Overview As has been said many times on the "Strictly Drilling and Oil Field Services" thread...."It's the price of oil stupid". This sector pretty well parallels the price of oil. Just looking through this sector it's pretty obvious that things are not currently getting any better. Land drillers for instance continue to have problems. Just glancing through the utilization rates for the stocks I listed shows an average of around 60% utilization and that was last quarter and is probably optimistic. Reality for this group is probably around 50%. Pretty dang ugly. The question is when will this sector start to pick up. In my opinion I don't see the land drillers picking up at all until the price of oil hits $18 and stays there for 6 months. So I'm not optimistic short term. Just looking over these sub-sectors....the land drillers, shallow water drillers, pipe makers, and land seismic, earnings should continue to decline. Safest areas appear to be deepwater drillers, offshore seismic and possibly some of the service co's like HAL and SLB. HAL for instance is doing quite a bit of cutting. The best deepwater driller of course is RIG. Quoting Mike Simmons of Drilling Bits he says, "As bad as driller stock prices are, they can go lower as the market looks to the future. Recent oil price strength, and maybe to a lesser extent the horribly oversold technical position of the stocks, is the only thing moving the pices higher. There is no fundamental change for the better for utilization, day rates or future prospects". Not a pretty outlook....... So Larry...I'd set up a Yahoo portfolio for each subsector to see how each group moves. I plan on doing that also. Best of luck with your investments. Paul

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