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

To: Think4Yourself who wrote (48070)	7/16/1999 12:46:00 AM
From: Tomas	Respond to of 95453

OIL: Black clouds hang over small producers - Financial Times, Friday The barrel price may have recovered but for many small producers the crisis is far from over, writes Hillary Durgin One more month of depressed oil prices and Gigi Lazenby, a small producer who operates in Kentucky's Big Thinking Fields, would have been out of business. "I was that close," says Ms Lazenby, who kept her workers employed cutting timber on her property as oil slumped to about $11 per barrel. The recent recovery has meant Ms Lazenby can stop dipping into her personal savings, a source that had almost run dry. "This is the first month for almost 20 months that I have not had to take money out of my pocket and put it in my company to keep it alive," she said. She was lucky. As the lowest oil prices in more than a decade brought the industry to a halt, oil companies laid off workers by the thousands. Many sought protection in bankruptcy or just gave up. However, although producers are breathing easier with oil prices hovering around $20 per barrel on the New York Mercantile Exchange, they are not yet uncorking the champagne. For some, like Ms Lazenby, prices in the field are still $3 to $4 per barrel below the Nymex price. Ms Lazenby got an average $14.52 per barrel for her oil in June and at that price it was still unprofitable to haul out her one small drilling rig to work in the field. For small producers the crisis is far from over. In a closely-watched case, a group called Save Domestic Oil has charged Iraq, Mexico, Venezuela and Saudi Arabia with dumping oil on US markets at below-cost prices. The US Department of Commerce has until July 19 to decide whether to investigate. The case has put a spotlight on the plight of the independent producers. The Independent Petroleum Association of America is capitalising on the attention to push a package of legislative initiatives, including tax credits and loan guarantees, that would provide financial relief to small operators. Larger independent oil producers take a different view of the price rebound. For companies such as Apache, a big Houston-based independent, the return to $20 oil has meant heftier cashflow and an increase in its stock price which last week closed at $40 per share for the first time since November 1997. "It's given everyone a sigh of relief," says Steve Farris, president and chief operating officer at Apache. "But it's a double-edged sword." Apache recently negotiated a deal with Shell Oil of Houston to buy a large block of properties in the Gulf of Mexico for $743m. It had hoped to buy another $2bn of assets before the year-end as large oil companies involved in mergers unloaded the rest of their onshore oil properties in North America. But with prices again above $20 a barrel fears the majors may be less willing to negotiate deals, pushing property values up at auction. Pierre Jungels, chief executive of Enterprise Oil, a London-based independent that is seeking to make acquisitions in the Gulf of Mexico, shares that concern. He fears that his competitors may think the price rise is here to stay. "Stay calm," is his advice to an industry that has tended to overspend on acquisitions as oil prices have risen and then had to take costly write-offs when prices fell. As a warning, he harks back to the lean years of 1988 and 1989 when bumper stickers in Texas said: "Please God give us another price rise and we promise not to piss it away."

To: Think4Yourself who wrote (48070)	7/16/1999 1:29:00 AM
From: A. Geiche	Read Replies (2) \| Respond to of 95453

FGI is scheduled to report on 7/27. The average consensus estimate is 0.35. Whispers expect 0.37, and I -- 0.41. Year ago it was 0.31. So, FGI, no doubt, did fine last quarter. But from now on, the wise people, dogs and shorts are telling us, it is doomed to gloom and under-performance. Being a fool, I cannot accept such wisdom. But FGI conference on 7/27 will be certainly very revealing. I believe that on 7/28 the stock will move up. Who knows when is the deadline for the oil barges to be converted in double hulled vessels? Is it 2005? If so, FGI has plenty of work. Big Dog, where are you? ag