Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: SliderOnTheBlack who wrote (42526)	4/18/1999 1:24:00 PM
From: Rob Shilling	Read Replies (5) of 95453

--- The "sector rotation" IMHO is the beginning of a big move to oil and cyclicals. The "gurus" that say it is temporary or a blip seem to believe that the world only needs microprocessors and webpages. I would like to see them try to run autos with megabytes instead of gasoline!! --- The "world financial system" IMHO is U.S. centric. I think this is a flaw that has already caused major problems such as the emerging markets being bascially sucked dry of money last year. A book could be written here, but let me focus on crude oil. The media and the financial "gurus" seem trained to demigog oil prices and OPEC in some sort of constant orchestrated campaign on behalf of the U.S.'s best interests to keep oil prices low. I don't know if it is orchestrated or just bad reporting, but even this weeks Business Week had an ariticle about why OPEC will fail. It is very interesting that the "market" wanted to see another 1 mbpd taken of the oil market, and OPEC trumped their call will over 2 mbpd, and there are still articles about how OPEC will fail even though their compliance is usually way over 50%. --- If one thinks Simmons and Rainwater are even slightly on the mark, we are not only due for higher oil prices, we may be due for an extended period of time (maybe permanent) of oil prices that are well above $20 a barrel. The drilling industry may become a much more steady performer in terms of earnings and revenues in the years to come. IMHO, every industry eventually goes through a transition and the oil industry looks to be changing dramatically. --- <slightly OT> I own some drillers, but I also have some money in what I think is the most leveraged bet on oil, Russia. I have seen some others talk about Russia here. Russia problems economically came basically from the super low oil prices of 1998. The biggest oil company in Russia is Lukoil(LUKOY). It has more oil reserves than any of the publically traded majors (and could be getting even bigger with new finds and mergers this year). Yet, LUKOY is trading at only a $5 billion market cap or about 25% sales (and the sales are growing fast) and 1/20 of other international majors. That spells leverage in a big way.

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