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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: Greg Spendjian who wrote (5769)	12/22/1998 8:37:00 AM
From: Kerm Yerman	Read Replies (2) of 24897

Greg - David Peever / Forecasted oil prices It was about 1-1/2 years ago that there was a symposium held for the oil industry and some advisory firm spoke on oil prices falling to $10.00 in the near future. The price of oil at the time was over $20.00. I shrugged it off as someone too extreme to pay any attention too. My scorecard now has at least two negatives. The first was the coming effects of El Nino - another one I shrugged off before the event occurred which I described as a forecast from the hippy-dippy weatherman, and now the $10.00 oil price which I thought was not possible. David, I think you may remember the oil forecast as I mentioned above. By any chance, do you remember the source? It's amazing how events and happenings bring you back to ground zero. However, we haven't quite arived at that level in relation to share prices of the oil and gas companies. BUT WE ARE DARN CLOSE. The name of this financial game is to buy low and sell high. The industry is far and away one of the worst performing sectors in the market. Oil is at a 12-year low - 25 years low if you factor inflation. The simplistic view is this, what goes down must come up --- eventually. Not withstanding any real deep general market correction, I think the oil and gas stocks are now presenting above average returns over the next 1-1/4 to 2-1/2 years with a minimum of downside risk. However, I continue to caution that one must be selective with focus on balance sheets, especially long term debt. A company must be able to service its debt and yet, continue to grow production and reserves. Add this growth + an increase in oil prices to the extent of 50% plus, you're going to be holding stocks a couple years down the road worth a lot more than the share prices you see now.

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