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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (47600)	7/8/1999 7:24:00 PM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

<< A modest pullback of 5-7% still looks like a reasonable bet. >> George; you may be right. Personally, I think we will strongly test a floor of 70 and will ultimately see mid/high 60's - maybe intraday low of OSX 66-7. The reason I think that it will be more than a minor 5-7% pullback is referred to in the article ''linked'' below: biz.yahoo.com I think we will see rampant profit taking off of this ''pop'' coming off the very positive API #'s and crudes move. Many people have posted on the Street expectations of profit taking & shorting Crude contracts here shortly. I absolutely believe that unquestionably; we will get a selloff going into and through this earnings reporting period. The numbers will be down sectorwide from the prior quarter and down substantially from the comparable quarter last year; and many, many companies have had downward revisions of analysts here. While there are plenty of individual news clips on a pending uptick of cap ex spending; it is not forthcoming nearterm from the Intnl Oil majors and they are required to drive the sector. The Major Oils, Integrateds & Independant E&P's are repairing balance sheets here. They are paying down debt, and living within projected budgets. This is the key statement in that linked article imho: ===================================================== << ...''''We're not seeing any new drilling yet, and that's where the jobs are,'' said Morris Burns, executive vice president of the Permian Basin Petroleum Association in West Texas. In that part of the Oil Patch, most activity this summer has consisted of workovers -- resuming production in old wells. Burns said drilling probably won't resume in earnest until prices have stabilized at $20 or higher for six to 12 months.'' >> ==================================================== The ''stabilization'' of these prices for at least the next 6 mos.+ is the key - the Intnl Oils & Major Independants have been very candid in stating that they will NOT dramatically increase cap ex spending untill doubts of Crude's sustainability are removed. - only ''time'' can & will do that... hence; no nearterm increase in the fundamentals of rig utilization, dayrates -earnings, or new mfg & service orders/projects. The E&P's (especially domestic Nat Gas leveraged companies) will reap a double edged sword of profitability here. They get drilling rates nearly 1/2 of last years rates in many cases and simultaneously get much higher commodity prices. Their fundamentals are the exact mirror image-opposite of the driller/service stocks here. Hence - an anomaly buying opportunity imho. I am not recommending my degree of risk taking here for anyone else; but I have nearly 60%+ of my entire portfolio into 2 domestic, nat gas oriented E&P's that I fully expect ''doubles'' on by XMAS and have another 20% into other E&P's that I expect a 25-40% return on by year end and only 20% in OSX companies - mainly RIG - which I will take profits on starting at $29 7/8ths and then eah $1 1/2 move from there... come on $38 buyout offer !.... With the homework I've done; I literally see little downside risk in CRK & MEXP - which are 60% of my entire portfolio here now. My upside is double what the OSX can offer in the most optimistic of nearterm expectations; and given commodity prices - especially the fundamentals of nat gas - I honestly believe I have less downside risk.... I am willing to take high risk, for what I see as a very intelligent - information and fundamentally supported window of opportunity that may close very quickly here... I will double that 60% of my portfolio by XMAS and then I will rotate into OSX stocks - and use some call option leverage; FLC being a fav' when fundamentals turn. There will be plenty of advanced notice here before the OSX takes off on any major move. The Street & the Mo-Mo crowd is no longer following Crude Prices ''tit for tat'' here... They very correctly have acknowledged that we are both fairly and optimistically priced here in driller & service stocks - given the super fundamentals of crude prices and the positive forward looking expectations - softened by the still negative fundamentals of rig counts, dayrates, backlogs and Industrywide cap ex spending. Also, the overall market is looking quite strong here; and that drains cash from the Oilpatch. The Oilpatch is no longer that attractive - to park your cash in - on the expectations of what will fundamentally turn in 6 mos. +/-... the nearterm expectations of the overall market are too positive. This will hurt the Oilpatch nearterm as well imho. There isn't enough cash available to sit for 6 mos. - waiting for what undoubtedly will be an ultimate turn in fundamentals. Do not underestimate this factor when considering the OSX's nearterm upside potential. ... it's going to be interesting. Personally; I'm looking for the ''trophies'' - ''elephant hunting''... doubles (CRK) - triples (MEXP)...etc. No ''index-esque'' returns for me (VBG). and as 'ole Warren B says: ''Diversity is a hedge against ignorance '' ''Livin on the edge''... and loving every minute of it. Nothing like adrenalin.... run Comstock, run... and Mr. Edwards - ie: the MEXP refinancing... All I can say is, Traverse City is very upbeat... Good Luck