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Gold/Mining/Energy : Global Santa Fe (GSF) (formerly Global Marine)
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To: Stitch who wrote (1270)3/5/1999 1:48:00 PM
From: Robert Douglas  Read Replies (2) of 2282
 
From an Oilfield Services bulletin (March 4, 1999) by Merrill Lynch's Kevin Simpson:

In fact, we are convinced that the current level of upstream spending is well below the level required to sustain global oil supply at current levels. While there will be a lag before supplies begin to fall, it is now likely that non-OPEC production will drop by 500,000 to 1 million b/d by year end 1999 and that it will fall further in 2000 even if spending turns up next year.

It is becoming apparent that oil prices are below “equilibrium” and that market forces will adjust them. Unfortunately for those of us invested in these stocks, a decline in drilling is the part of the mechanism of adjustment. The good news is that if the above is true, we are nearing an end to our pain. If my projections of renewed demand are fulfilled just as supply has been diminished, we could have a spectacular turnaround in drilling stocks.

-Robert
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