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To: ms.smartest.person who wrote (91)	6/28/2000 9:00:00 PM
From: ms.smartest.person	Respond to of 307

OILFIELD EQUIP & SERVICES With crude prices hovering around $30 bbl, the sector has understandably performed well over the past three months. The oil service stocks lead on the way up when oil prices are increasing relative to the major oil companies. It is likely that oil prices will hold up as indications from OPEC members are that they will not agree to increase production when they meet in June. However, pressure is coming from the U.S. to increase production in order to lower prices -- this is especially true in an election year. We expect demand to remain strong throughout the summer and overall, positive on the sector long term on the basis of higher oil prices and strong EPS growth. The higher oil prices will propel earnings for the foreseeable future. In fact, the average EPS growth for 2000-2001 for the five largest in the sector is expected to be 103%. Over the short term, however, I believe that the recent run-up in shares already reflects the immediate positive outlook including the OPEC's likely decision to not increase production. As such, the sector will Slightly Outperform. For long term I like Halliburton (HAL) and Baker Hughes (BHI) as EPS is expected to grow 80% and 137%, respectively, for 2000-2001. These two companies also have attractive p/e ratios in the low 30s for 2001 EPS. Top pick, however, is Transocean Offshore (RIG) and here's why: EPS is expected to increase 150% translating into an attractive 22x p/e ratio for 2001; also, capital expenditures for drilling is still in the early stages. RIG, as the world's largest offshore drilling contractor, stands to benefit as a result. Stocks: Baker Hughes (BHI), R&B Falcon (FLC), Global Marine (GLM), Halliburton (HAL), McDermott International (MDR), Nabors (NBR), Noble Drilling (NE), Schlumberger (SLB), Smith International (SII), Tidewater (TDW) and Transocean Offshore (RIG). 5/24/00