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

To: pz who wrote (50607)	9/8/1999 12:59:00 PM
From: Think4Yourself	Read Replies (1) \| Respond to of 95453

PZ, those ARE good articles. Thanks for posting them. I knew about Crazy Horse and Mad Dog, but maybe I should clarify my question (I left one word out). Why buy the Drillers and O/S companies NOW? Why not wait until AFTER the earnings (which HAVE to be disappointing) start to come out, or until OPEC starts cheating, or even the RUMORS of OPEC cheating start running the news circus? The timing still makes no sense to me.

To: pz who wrote (50607)	9/8/1999 1:25:00 PM
From: The Ox	Respond to of 95453

Thanks for the nice links,pz. I've been scratching my head trying to figure out the analysts who cover this sector and how they come up with the figures they "promote". No matter how I slice and dice the numbers, I keep coming back to the same conclusion, that these people are either very far behind the curve or are intentionally keeping the information to themselves. I'm using APC-Anadarko for this example but I believe you can insert any E+P or Oil producer in this argument and still have a strong case. For the second quarter of 99, APC generated revenues of approx $160MM (80MM gas@$1.95, 60MM oil@$15, 20MM NGL@$12) and meager earnings of $0.06/share. BTW, those of us who have followed this thread for the last couple of years have had "drilled" into our psyche that $15 oil was kind of like the make or break standard for most companies. Below $15, it's difficult to make any money and over $15 these companies should start generating better profits. The 3rd quarter of 1999 has seen significant increases across the board in the prices of oil, gas and nat. gas liquids. These increases are large enough that we might be able to use a nice round number, like a 20% or 25% increase in prices in an attempt to extrapolate what earnings might be under these new conditions. Getting back to APC, we see that analysts currently have estimates for the 3rd quarter at 8 cents for the quarter and, at first glance, we might say that's 25% more then what APC generated in the previous quarter, in line with our 25% move in commodity prices. I speculate that what these analysts fail to understand is that $15 oil was more or less the break even point and that for every dollar that oil rises above $15, a greater amount of that revenue finds it's way to the bottom line as the bulk of the cost to "pump" that oil/gas hasn't changed. If we compare 2nd quarter results of APC and APA, we see that APA generated $0.28/sh and APC only generated $0.06/sh. One of the keys, IMO, to this difference is that APA's average oil price was $16/bbl compared with APC's $15/bbl for the same period. It's not that easy, as APA's revenues were $281MM compared to APC's $161MM and of course there are different cost structures to deal with, as well as different # of shares outstanding(etc.), but I believe my point is obvious. Like I said earlier, insert whatever company you like in this model and look carefully at the numbers. I think you will see that we have some real bargains still available in the patch. To press the APC point, add to the mix the $650MM capital expenditures for 1999 and that we are getting talk of sustained $20/bbl oil prices for the next 6 months and I get even more bullish on this one. But this post is not designed to push APC, it's point is to show how many of the companies in this sector are probably going to have a much better future then the analysts currently forecast. Just my opinion and I'm open to suggestions, corrections and criticism. Michael

To: pz who wrote (50607)	9/8/1999 1:41:00 PM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

pz; any news posts from the last 12 months by chance ? ie: <<In addition to Crazy Horse, BP-Amoco made a discovery at the Mad Dog prospect on Green Canyon block 826 in 6,600 feet of water. The well was spud in May 1998 >> .... I think quite a lot has changed concerning deepwater since May 1998 - witness BPAmoco's CEO Browne's comments of late and most importantly the recent GOM lease event - or non event... My momma allways told me to watch what they ''do'' not what they ''say'' - ie: they did not ''do'' anything in the recent Deepwater Offshore GOM lease sales ! So I guess the Oil Majors failed to put their money where ''Explorer'' magazines mouth was... I hear there are lots of Deepwater Geologists getting laid off... maybe they should look onshore, or in shallow water where all the Nat Gas Drilling is going on... ? PS - I hear MEXP is hiring;MEXP is finding lots of ''Gas'' in those Missisippi Salt Domes where ''some'' former Geologists blew off a huge find... (VBG). - hey; you know what they say about those damn geologists anyway...