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

To: Razorbak who wrote (59642)	2/3/2000 9:13:00 AM
From: Wowzer	Respond to of 95453

Mutual Funds Feb 03, 2000 Conservative Way to Play Bubbling Crude (2/3/00) After a long decline, oil prices finally recovered last year. After bottoming below $10 in November 1998, the average price of crude more than doubled to $28, before finishing the year at $25.60. No surprise, energy stocks rallied. Demand for crude continues to climb as Asian economies recover and producers, burned by years of low prices, think twice before developing new fields. Meanwhile, OPEC seems determined to hold the line on production, postponing hopes for a glut led price decline. Conservative investors who want to get a foot in the volatile energy field might consider Petroleum & Resources (NYSE:PEO - news) , a closed-end fund with lower risk scores than its open-end rivals. 'This is the safest, most boring way to play the sector,' says Alfred Blomquist, editor of The Closed End Fund Reader, a newsletter published in Franklin Lakes, N.J. The fund?s stock, which trades on the Big Board, closed Wednesday at $33, a 13.4% discount to its Net Asset Value (NAV). Pretty attractive, considering that for the past five years, Petroleum & Resources has returned 10% annually, outdoing most competitors. Shares of closed-end funds, unlike their open-end cousins, trade like stocks. Although a fund's share price reflects the value of assets in its portfolio, such factors as the liquidity of the market in which the fund invests also count. As a result, closed-end funds often trade at discounts or premiums to their net asset value. Portfolio manager Douglas G. Ober stays out of trouble by sticking with big dividend-paying oil companies, such as Exxon Mobil (NYSE:XOM - news) , and Royal Dutch Petroleum (NYSE:RD - news) . Ober also owns shares of a few solid oil service operators, including Schlumberger (NYSE:SLB - news) and Transocean Sedco Forex (NYSE:RIG - news) . With ample financial resources, such multinationals can sometimes stay afloat during periods when smaller energy companies sink. And he keeps about 20% of the closed-end's assets in blue-chip companies, such as General Electric (NYSE:GE - news) . These kinds of positions could hold the fund back in an energy rally but buoy it in more difficult years. For example, in 1998, with petroleum prices weakening, the fund?s NAV fell 11.1%, compared with a loss of more than 25% for the average natural resource fund. But last year, with the wind at its back, Petroleum & Resources? NAV soared roughly 17%. Petroleum & Resources pays a dividend which yields 2.4%. That payout can provide shareholders with some consolation, even when oil isn't soaring.