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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Fredman who wrote (30735)10/15/1998 2:29:00 PM
From: The Ox  Read Replies (3) of 95453
 
Hi Fred,
You can throw out all the valuation models and all the talk about "what a great buy" these companies are if Brent continues to trade below $13/bbl for a sustained period of time. The good news, if you can call it that, is that the OS companies will, out of shear necessity, continue to become leaner and meaner. There will continue to be consolidation and economies of scale benefits.

Threats, like the one recently made by one of the Persian Gulf ministers ( if I remember correctly it was Kuwaiti), to flood the market with oil because other producing countries are cheating, do absolutely nothing to help this sector. There appears to be a lot of oil available right now and it will continue to be cheap and accessible until demand increases greatly or tighter production controls are followed by all the producing nations.

I don't see any problem with starting positions in most of the companies in this sector, as long as one understands that there is still a downside potential. Someone has to buy at the bottom and I am going to try to be one of those who comes very close. I follow the industry news as much as time permits.

I don't see any reason to pound the table at this time. Nibble? Maybe.

Best regards and good luck,
Michael
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