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

To: marc chatman who wrote (50025)	8/29/1999 2:09:00 PM
From: SliderOnTheBlack	Respond to of 95453

re: Price Bands & 'no brainer' ... I think OPEC is actually being very smart here.... They know they can NOT increase production now. They also know that maintaining present production cuts WILL create a speculative Crude bubble and will spur Global Production 'potentially' - unless they have a 'plan' (read ' Price Bands') to quickly institute into place, which will keep prices from crashing quickly - which is what ramping up their production & lifting quotas would do. But, also they need a plan which would lead the market to both a gradual easing into a level price band for crude - but hopefully also simultaneously sending a message to other producers that they will not lose market share by allowing prices to be 'sustained' at levels that would spur Global production increases... thus discouraging others to ramp up production. The temporary spike will be inevitable - OPEC knows this; but they are ingeniously (a first ?) 'floating' the idea to the market and will gain a consensus agreement for its institution (price bands) when the speculative bubble occurs... this will pre-discourage others from ramping up production and will set the market up for an 'easing' downward versus a crash downward when they ultimately increase production and institute their 'Price Band' system... I think it is brilliant - actually. - perhaps; this is why CEO's like BP's Browne - are NOT going to up Cap Ex spending to levels that everyone thinks they are.... OPEC is going to FINALLY do the right thing imho.... PS - if anyone thinks that this is not what the Oil Majors & Major Indpendants see happening ; look at the recent Offshore lease sales here: People, without new leases - the cap ex spending is NOT going to ramp to levels to support OSX stocks running as fast, or as far as many here think. I think both the Oil Majors & Independants are going to be very prudent & conservative here. They are going to remain lean & mean and flow cash to the bottomline during this potentially historic market transition by OPEC... <<ú On Wednesday, the MMS held Western Gulf of Mexico Lease Sale #174 in New Orleans. The results were the weakest for this annual event since 1994, as only 177 bids were submitted for just 153 blocks, with total high bids of $94.6 million. This compares to last year's Sale #171, which received 486 bids on 402 blocks and $553.4 million of high bids, and the record 1997 sale, which received 1,224 bids on 804 blocks and $616.2 million of high bids. Kerr McGee submitted the high bid of $11.3 million for Garden Banks 877, compared to last year's high bid of $37 million (by a Unocal-led group) for Alaminos Canyon 947. Many oil companies, notably BP Amoco, Mobil and Chevron, did not participate in the auction. In our opinion, the weak results are reflective of a reduced industry focus on exploration work, relative to exploitation/development, plus relatively large lease inventories. Thus, the poor showing does not come as a surprise to us.>> .... these poor lease sales (with BP Mobile Amoco Chevron virtually not participating ! - Hello World !!!) show what the future holds for driller & service stocks - not doom & gloom, but perhaps for year 2000 - not as rosy as many think. Year 2000 will be the transition year imho. It will be a year of windfall profits for Oil Majors & E&P's - as they wait for the 'Sustainability' issue to be resolved - which OPEC's institution of a 'Price Band' Policy - will do ! .... I just think OPEC is potentially going to execute brilliantly here and we will see a Crude Oil bubble first - then they institute the 'Price Bands' as the answer.... Just my Nostradomusesque .02 cents (VBG). We will see a potentially historic windfall for the E&P's here in the next 3-4 quarters imho; I think the 'sweetspot' time for the OSX stocks is late 2000 onward - as OPEC's 'Price Band' management will finally be a successfull answer to the doubts of the 'Sustainability' issue for the Oil Majors. late 2000 will be the Cap Ex boom which 'then & only then' will lead the drillers & service stocks into a multi-year Oilpatch Bull Run imho....led by Global demand growth & matched by OPEC finally managing & balancing production to prices. The Price Bands will work - and are brilliant ! They will not be perfect, commodities are impossible to micro-manage; but this 'price band' concept will work... the 'banded' range of prices being the key. $18-22 Brent for example with average prices targeted for $20. ... a new era & perhaps the end of the "Boom & Bust' Oilpatch cycles ?????? We could be seeing history made folks...