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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Richard Saunders who wrote (6097)2/24/1999 5:56:00 PM
From: Serge Collins  Read Replies (2) of 24892
 
Some good comments today about the plight of the oil and gas sector. It is very bad right now in the oil patch and will get worse before it turns around. We haven't even seen the year-end writedowns and many companies will be making big ceiling test writedowns this year. This is worse than the difficult period of the early 90s when even some big companies went down (ie.Sceptre Resources).

As mentioned by Johnlag, any small or mid-sized producer which is highly leveraged is at risk of going down the same road as Amber or Remington. Even good little companies like Olympia with no debt and good cash positions are getting punished by association.

Eventually things will improve, but I'm expecting lots of blood to flow before the carnage comes to an end. I wish I could be more optimistic. The problem is no one foresaw the sharp decline in commodity prices and many companies got giddy a few years ago when money was easy and investors were willing to pony up. Too many companies got greedy thinking they were going to become the next Renaissance and threw caution to the wind, now the party is over and what's left is a big hangover.

P.S. Makes you wonder what sort of hangover the overall market, particularly the U.S. tech stocks, are going to have once that party ends.

Good luck.
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