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

To: monu who wrote (56417)	12/8/1999 9:30:00 AM
From: Aggie	Respond to of 95453

monu, good morning, I drove up to Dallas last weekend, taking the back way through the Brazos River Valley. Around College Station the landscape is dotted with Austin Chalk wells, and from this single road I counted 4 workover rigs and 2 Nabors full-sized drilling rigs. Activity in this area can only be described as heavy. The sign I look for, having lived in this area for about 20 years, is road traffic. Being an oil professional, I recognized service company trucks and personnel: Dowell, Schlumberger, Halliburton, etc. Not only the well services companies, but also the numerous suppliers and rental equipment companies which support rig operations. You pass them on the road, and you see them parked at the 7-11, barbeque joints, and roadside motels, and you see the boys in coveralls in the check out line. I believe that operators are responding to commodity prices in a way designed to maximise their short term cash flow, that is, they are working over wells which already have the producing infrastructure in place and can simply be worked and put back on line. The second most immediate excercise is to drill infill wells within areas which have readily available infrastructure to hook in to. I think that some of Doug's notes from the West Texas oilpatch reflect the same dynamic. How this will translate into increasing share price is anybody's guess. I too am frustrated that this spurt in activity does not seem to be reflected in any increase in optimism for the immediate future. On the other hand, as it has been pointed out before, (1) there are still plenty of year-end profits yet to be realized, even with the stock at these levels, (2) demand is simply not there thanks to an abnormally warm winter so far, and (3)like it or not, investment in general is liable to be sluggish until we pass the New Year and Y2K concerns abate. Let's not forget the enthusiasm seen on this thread last May when things finally turned. The situation now is a whole lot more solid than it was then. Anyone expecting true boom conditions in the first quarter next year is liable to be disappointed, as it is more likely that the turnaround will manifest itself with strong recovery in the US but slower recovery overseas. As most companies are now international, the effect on stock prices and earnings will most likely be moderated by this. So...as I am heavily invested in the O&G sector (and as I believe next year will be a good one), I guess I'll sit by and keep cash handy to buy this dip. I'm not happy about it either, so call me: The Pissed_Patrol Regards to all, Aggie