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Gold/Mining/Energy : Friede Goldman Halter (FGH) -- Ignore unavailable to you. Want to Upgrade?

To: Adelantado who wrote (50)	3/27/2000 11:17:00 AM
From: JK	Respond to of 177

Joe, << there was discussion that this sector was hit because of the low price of oil. Now with the price of oil being higher than any other time before, we see further erosion in market value of these companies, disproving the theory that low prices cause prices in this sector of the economy to drop.>> Though I largely agree with your post, I think that there IS a correlation between low oil price and a drop in this sector. I believe you are correct in that there is market interest in high-tech and "insecurity" in FGH. The benefit from the higher price of oil will come, but it just happens in slow motion (18 months or more); you know, the oil tanker turning analogy. About a year ago oil was essentially an unprofitable business for the big guys. They dramatically slowed exploration. As oil has come back, gradually so has drilling. Only when drilling and exploration get hot and heavy (high % of rig utilization) will service and support co's come into their own. As you correctly observe, << Assuming that FGH is back on track, this may be the time to pick-up shares in this sector at these bargain prices before the market learns that in order to produce more oil, you need equipment and the oil service industry is there to serve >> The combination of a natural decline in production from older existing wells, the control of OPEC, and an increasing worldwide demand will keep the price of oil in the mid-20's and bodes VERY well for service companies like FGH. It just takes time and patience. And some good management. Good luck. - jk