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

To: Tomas who wrote (74628)	9/26/2000 10:42:47 AM
From: Tomas	Respond to of 95453

Oil stocks follow prices down - Analysts dismiss dip as overreaction, say sector still promises much upside The Globe & Mail, September 26 By LILY NGUYEN CALGARY -- Oil stocks followed the price of crude down yesterday, but analysts dismissed the pullback as a market overreaction in a sector that still boasts plenty of upside. ... Despite the pullback by crude and the energy stocks, analysts remain optimistic, saying the downswing in the market is driven by speculators and panic selling, not a change in the outlook for energy producers. "Is there anything to worry about? Absolutely not," said Brian Prokop, an analyst with Peters & Co. in Calgary. "The buy-and-holders are still buying and holding." Mr. Prokop said investors pulling out of the sector are likely less worried about the recent dip than the spectre that it could be a harbinger of a wholesale crash in oil prices. "Right now, I would suggest the psychology is, 'What if it goes from $30 to $23? Boy, I better not get into it until I'm sure it's over,' " he said. Analysts dismissed fears of a coming crash in oil prices. The U.S. decision to sell 30 million barrels of crude over 30 days has more political impact than market impact, Mr. Prokop said. Investors are building in an oil price of about $20 a barrel in 2001, based on current share prices, analysts said. But most forecasts put the price closer to the mid-$20 range in 2001. "To shave 2 or 3 per cent off the value of stocks, which were not reflecting the high values anyway, seems sort of a silly reaction," said Gord Currie, an analyst with Canaccord Capital Corp. in Calgary. "The amount of production the U.S. is going to release is 3 per cent of their total inventories. It is a ridiculously small amount," he said. With U.S. stocks of heating oil and crude oil still low heading into the winter season, supply is unlikely to ease, analysts said. If anything, the downward move presents a prime buying opportunity, they said. Oil and gas shares were cheap even at their highs earlier this month, and they're just cheaper today, analysts said. "We liked the stocks on Friday. We like them even more today," said Terry Peters of Griffiths McBurney & Partners in Toronto. He added that falling prices actually have long-term benefits for the sector, removing some of the volatility from oil prices, which were widely seen as reaching unsustainable heights. "Any events that cause oil to get priced in the market at a level that's sustainable would bring some stability and be positive overall for oil and gas investment," he said. "This makes a nice opportunity for anyone who has missed the boat to climb back on board," Mr. Currie said. His top picks are PanCanadian Petroleum Ltd., Alberta Energy Company Ltd., and Talisman Energy Inc. Mr. Prokop said that at current prices, oil and gas shares are trading at about three to four times cash flow, versus the historic valuation of about seven times. He listed Canadian Natural Resources Ltd., Canadian Occidental Petroleum Ltd., and Talisman among his picks. They're all taking a hit in the sector's correction, he said. globeandmail.com