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: ChanceIs who wrote (45776)	6/2/1999 11:10:00 AM
From: Terry D	Read Replies (2) of 95453

Bear Research - 6.2.99 Industry Overview Ellen Hannan/ Dirk Van Doren – Oil & Gas Exploration and Production Exploration & Production Monthly Review We continue to have a positive stance on the group based on our belief that commodity prices (particularly natural gas) should remain strong in 1999. This will likely lead to estimate increases throughout Q2. Additionally, y/y earnings comps for most companies in oil should turn positive in Q2, and gather strength in 2H. Our group multiples for 2000 are surprisingly low given commodity price strength. As commodity prices continue to move up, we believe the potential for multiple expansion is significant. What To Buy? Our #1 pick in large cap is Devon Energy, while our mid/small cap top pick is Stone Energy. Our picks based on strategy: 1) Exploration: Meridian Resources. Our $7 price target could go significantly higher with continued drilling success. Downside is probably $4. Stone Energy. Our target is $41 with downside in the high-$20s. 2) Development: Cross Timbers. Our target price is $15 with downside around $8. 3) Balance Sheet: Newfield. Our target price is $30 with downside $18. 4) Asset Value: Plains Resources. Our target price is $28 with downside around $15. Evergreen. We believe the stock is worth about $30 and the downside is the high-teens. 5) Consolidation: Apache Corp. Our upside for APA is the low-$40s with downside estimated in the mid to low-$30s. Devon Energy. We believe the stock could reach the low-$50s over the next year as the PZE assets are assimilated into Devon. 6) Rock Bottom Valuation: Range Resources. We believe upside is at least $7 while the downside is about $3.

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