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

To: ItsAllCyclical who wrote (61942)	3/10/2000 3:02:00 PM
From: Think4Yourself	Read Replies (1) \| Respond to of 95453

NOTE: The following report on OXY just released. With all the upgrades coming out, I got back in today. RESEARCH REPORT - DB ups Occidenal EPS on Altura NEW YORK, March 10 (Reuters) - Deutsche Banc Alex. Brown oil analyst Michael Young on Friday raised his 2000 earnings per share estimate for Occidental Petroleum Corp. (NYSE:OXY - news) by $0.40 to $2.80 and by $0.30 to $2.30 for 2001. He said the upgrade reflects the recent acquisition of Altura Energy, a Permian Basin oil and gas partnership owned by international giants BP Amoco (quote from Yahoo! UK & Ireland: BPA.L)(NYSE:BPA - news) and Royal Dutch/Shell Group (quote from Yahoo! UK & Ireland: SHEL.L) in a $3.6 billion deal. ``The Altura purchase is a positive development for the company's stockholders,' noted Young, adding the purchase should be extremely accretive to earnings and cash flow. ``We calculate 17 percent EPS accretion in 2000, 15 percent in 2001,' he said, adding this assumes an average price of $25 a barrel for benchmark U.S. crude West Texas Intermediate in 2000 and $21 a barrel in 2001. Young rates the shares of Occidental a strong buy and has a 12-month price target $28. Shares in Occidental were trading 5/16 up at 17-1/2 early Friday afternoon on the New York Stock Exchange, against a year high of 24-9/16 and low of 15. He said because of a mandatory debt repayment schedule, Altura will likely not be cash flow positive to Occidental within the first four years, unless oil prices are substantially above his $21 per barrel forecast. But beyond the fourth year, he said, forecast returns on Occidental's net investment should begin to rise quite sharply. He said Altura, which is located in the Permian Basin production area of New Mexico and Texas, adds some 120,000 barrels per day of liquids production and 85 million cubic feet per day of gas production to Occidental's volumes. ``Such output boosts the company's year 2000 global liquids production by almost 45 percent and gas output by 12 percent on an annualized basis,' Young added in his report. He said the deal's structure was not a bad arrangement, with $1.2 billion in equity capital to be paid by Occidental to gain managing control of Altura, in addition to $2.4 billion in debt by the Altura partnership non-recourse to Occidental's assets. ``These borrowings likely will be backed by $2 billion in long-term notes by BP Amoco and Shell Oil Company... We expect that borrowing costs on the $2.4 billion will be in the 7 percent range, which is well below OXY's stand-alone borrowing cost of approximately 9 percent,' he added.