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

To: Gary Burton who wrote (55087)	11/19/1999 5:25:00 PM
From: Nathan	Respond to of 95453

Gary thank you for the explanation. That makes a lot of sense so it sounds like we have a long wait to see where oil settles. Nathan

To: Gary Burton who wrote (55087)	11/19/1999 5:28:00 PM
From: ItsAllCyclical	Read Replies (1) \| Respond to of 95453

Gary, I agree to a certain extent on your take about oil prices vs oil related stocks. However, unlike the OSX, the E&P's by an large have been basing since the end of April early May. That's quite a bit of coiled spring action imho. I think you'll miss the lion share of the gains if you wait till March or June to get into the E&P's in a big way. $25+ oil seemed to be a catalyst imho. Any spike to $30+ will also be a catalyst. Large production increases will be a catalyst. Winter drawdowns will be a catalyst. Another quarter of blowout earnings will be hard to ignore. It doesn't take too many mo-mo guys to get this train rolling...

To: Gary Burton who wrote (55087)	11/19/1999 7:09:00 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

GaryB; there is another philosophy on why PXD et al have lagged... Actually; many analysts have commented that it is not because of the fears of OPEC relaxing production constraint, or the resulting pullback of crude to $18-20ish etc. $18-$20 crude would be very profitable and positively received by the street. It is due to the decling production - the failure to replace production; due to reduced cap ex spending during 1999. This was a result of near alltime low commodity prices and the necessary fiscal conservatism of many leveraged E&P's. PXD UPR OEI are all great examples of former institutional fav's - and will be again; who have been penalized for their declining production. UPR has a huge increase in cap ex spending in 2H 1999 & 2000 compared to the past 12 mos. OEI will increase production 10-15% next year, which is substantial; after declining production in 1999 - which was due to balance sheet deleveraging, producing property sales and reduced cap ex spending. The reason that these issues are lagging in shareprice aprpeciation - compared to the momenteum shift in their fundamentals; is because while commodity prices have ramped and in many cases cfps has ramped, even in some cases earnings have ramped; in most cases - production has not; these companies must replace their production - they were not; because of the dramatic cap ex cuts in drilling. We are right on the cusp here in production turning upward; primarially because of the vastly increased cap ex spending for increased drilling activity seen in the 2nd half of 1999. This stepped up drilling in July to Dec. will finally show its production results from about Oct 1999 (the first signs are here) thru March 2000. We will very shortly have some E&P's with strong earnings and only PE's of 7-8; with cfps multiples near the historic bottoms of their valuation ranges. There will be huge analyst revisions to the upside after Q4 1999 and Q1 2000 reporting imho; this sector will "rock & roll" come late January... Imho; watch for production increases. The most positive thing that I see; is cfps multiples are at near the historic bottoms here; when we see multiple expansions to the mid, or late cycle levels; these stocks have huge upside here; that is fundamentally supported.