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

To: Tomas who wrote (59990)	2/9/2000 10:02:00 AM
From: Tomas	Read Replies (2) \| Respond to of 95453

Canadian drillers' shares slide as activity rises Share prices of Canada's largest oil well drillers fell in the last three weeks because the record level of drilling activity will continue throughout 2001, but not increase, analysts said on Tuesday. In its weekly activity report, the Canadian Association of Oilwell Drilling Contractors said about 95 percent, or 568 of the 597 available rigs in Western Canada were operating. That is the highest number of rigs ever operating at one time. In the year-earlier week, only 64 percent, or 379 rigs were in the field exploring for oil and natural gas. Yet despite the frenzied pace, the Toronto Stock Exchange's oil and gas services sub-index, which tracks the performance of drilling firms, has fallen 9 percent since January 19. ... Analysts are expecting as many as 17,000 wells to be drilled this year, up from 10,600 in 1999, and then dipping slightly to about 16,600 in 2001. The record high was in 1997, when the industry perforated the landscape with 16,500 oil and gas wells. "What's impacting the share price of those larger service companies are the earnings expectations and then the kind of price-to-earnings (P/E) valuations placed on those earnings in order to result in a share price," said John McAleer, an industry analyst with Calgary-based FirstEnergy Capital Corp. "If you're in an environment where 12 months down the road you expect continued growing earnings, then that P/E multiple will be above average. But if you expect a flat year, those valuations should come back into the average range." The P/E multiples placed on the drilling companies eight months ago were above average, at about 17 times expected annual earnings per share because the outlook was for more wells to be drilled in 2000 than in 1999. Those multiples have now decreased to about 12 times expected earnings because fewer wells are expected to be drilled in 2001 than 2000. canoe.ca