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

To: Ronald J. Clark who wrote (67402)	5/31/2000 6:05:00 PM
From: jim_p	Respond to of 95453

Comments from Raymond James: Raymond James Energy Stat of the Week, published 05/30/2000. The on-going belief in most cyclical businesses is that "earnings will peak when replacement cost economics are reached." As this theory relates to oilfield service companies, the thought is that as pricing approaches replacement costs and companies start adding new equipment and infrastructure (i.e. rigs, boats, etc.), the increased costs offset earnings growth and over-capacity drives prices down. In other words, earnings growth "peaks" once new drilling rigs begins to hit the market. The problem with applying this theory to the oilpatch is that it usually takes a very long time to dramatically change oil and gas supply trends. This means that the oilfield industry should see several years of steady growth before over-capacity slows the growth.