Seen this from B of A (do they still have RSCO)?:
Oil Services Stocks Primed for an Upturn
Analyst Confident 2000 Will Be Better-Than-Expected
SAN FRANCISCO, Oct. 4 /PRNewswire/ -- The following is being issued by Banc of America Securities, a member of
the National Association of Securities Dealers, CRD number 26091:
(Photo: NewsCom: newscom.com )
Oil services stocks have performed well in 1999, and pent-up demand for equipment and services indicates there is a lot of
upside potential left in the sector for 2000 and beyond.
''Oil and gas prices have been rising for six months, and in fact, recently set 24-month highs,'' says Michael K. LaMotte, an oil services analyst with Banc of
America Securities. ''Despite apparently having closed the books on 1999, many operators are preparing for a more aggressive 2000.''
LaMotte's comments came at the 29th Annual Banc of America Securities Investment Conference, which ran through October 1 at the Ritz-Carlton Hotel in
San Francisco. This former Montgomery Securities conference had a new name but boasted a program that lived up to its impressive reputation. The five- day
conference featured 250 presentations from companies that are driving the Business Services, Consumer & Retail, Energy, Entertainment, Media & Telecom,
Financial Services, Health Care, Industrial Growth, Real Estate & Lodging and Technology industries.
The oil market recovery that OPEC kick-started with its March 1999 production cut agreement of 1.7 MMB/d, combined with seven months of positive
demand revisions, means that a recovery in the oil services sector is imminent, says LaMotte. In addition, operators are reliquifying their balance sheets: at the
end of the third quarter, SEC shelf registrations year-to-date totaled more than $17 billion. U.S. drilling permits also indicate very strong growth going forward.
''The North American market appears to have bottomed in this year's second quarter,'' says LaMotte. ''The U.S. and Canadian rig counts have been very
strong, with the U.S. count up roughly 45% from its trough.''
LaMotte believes that non-North American recovery will be more sluggish, mainly because of the fact that international regions are largely the domain of major
oil companies, most of which are sorting through consolidations and/or reorganizations. And, generally, global projects move more slowly due to greater capital
intensity and complicated logistics.
Currently, the domestic portion of the oil services sector is focusing on shallow onshore natural gas. However, the international sector is concentrating on
deepwater activities, particularly off the coast of West Africa and Brazil.
''We are very confident that 2000 will be a better-than-expected year,'' says LaMotte. ''Given our positive views, the relative illiquidity of oil service stocks,
and the fact that the stocks are at the low end of our expected near-term trade range, we believe now is a very good time to invest in this sector.''
LaMotte's top stock recommendations among large cap oil services stocks include: Baker Hughes ((NYSE: BHI - news), $27-15/16, Strong Buy)* and
Haliburton ((NYSE: HAL - news), $40-1/2, Buy). In the equipment and services category, he likes Petroleum Geo-Services ((NYSE:PGO - news),
$18-1/16, Strong Buy), Weatherford ((NYSE: WFT - news), $31-13/16, Strong Buy), Smith International ((NYSE: SII - news), $39- 13/16, Strong Buy),
and Cooper Cameron ((NYSE: CAM - news), $36-7/16, Strong Buy).
In the offshore drilling category, he gives high marks to Noble Drilling ((NYSE: NE - news), $21-15/16, Strong Buy), Santa Fe ((NYSE: SDC - news),
$21-3/8, Strong Buy), Global Marine ((NYSE: GLM - news), $16-15/16, Buy), ENSCO ((NYSE: ESV - news), $17- 5/8, Buy), and R&B Falcon ((NYSE:
FLC - news), $13-1/8, Buy). Finally, in the offshore services category LaMotte favors Stolt Comex ((Nasdaq: SCSWF - news), $11- 1/4, Strong Buy)* and
Coflexip ((Nasdaq: CXIPY - news), $49-3/16, Buy)*.
Banc of America Securities LLC (BAS), a subsidiary of Bank of America Corporation, is a full-service investment bank and brokerage firm. With principal
offices in San Francisco, New York City and Charlotte, BAS employs more than 4,000 associates in offices around the country, and with affiliates, offers
capabilities worldwide.
Bank of America Corporation, with $614 billion in total assets, is the holding company for one of the largest banks in the U.S., with operations in 21 states and
the District of Columbia.
Banc of America Securities LLC was manager of a public offering for Baker Hughes in the last three years. Banc of America Securities LLC was co-
manager of a public offering for R&B Falcon in the last three years. Banc of America Securities LLC currently maintains a market in Coflexip and Stolt Comex |
