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

To: SliderOnTheBlack who wrote (80390)	11/30/2000 12:28:59 PM
From: Gottfried	Read Replies (1) \| Respond to of 95453

Slider, your 2 last posts are very perceptive. I see parallels to the cyclical semi equipment stocks. >- I think many investors here have the same problem... They are blindly focusing on the very attractive underlying fundamentals at this "mature" point in this cycle.< Thank you. Gottfried

To: SliderOnTheBlack who wrote (80390)	11/30/2000 3:26:13 PM
From: Big Dog	Read Replies (1) \| Respond to of 95453

From Lehman today (before the pounding of today) Oil service and drilling stocks were off big yesterday, in some cases by over 10%, on a report by a competitor that oil that has been sent to China will be sent to the west and result in a build up of inventories that will add to OPEC’s difficulties coming out of the winter heating season and lead to a hard fall in the price of oil. We continue to believe that a soft landing is likely and that oil prices will average $25 per barrel next year. Yesterday’s drop in oil service and drilling stocks is a continuation of a decline that has seen the OSX drop by almost 30% and several contract drilling stocks have fallen by about 40% from their recent peaks. At current prices, we believe that the stocks are discounting an oil price drop below $20 per barrel – something we clearly don’t expect. Meanwhile, the pace of the recovery continues to be outstanding and indicators of the recovery continue to be positive. North America is booming and capacity constrained just one and a half years into the recovery; international markets are all improving; dayrates are moving higher for all types of rigs in all regions with some eye-opening dayrates for deepwater rigs in the Gulf of Mexico; companies across the board are indicating a strong October and first half November; and fourth quarter earnings are expected to be at or above expectations. Moreover, our widely followed E&P spending survey of some 350 companies is showing E&P budgets up 23% for 2001 after 177 responses. This is mostly independents but makes us feel confident of at least a 15% increase in spending which our EPS estimates are based upon. All stocks should do well here if we are correct on oil prices. The most attractive stocks in the group in our judgement are the contract drilling stocks, many of which have declined by about 40% with exceptional fundamentals. Stocks that are particularly attractive at current prices include Santa Fe International (SDC;$26 15/16), Rowan Companies (RDC;$21 3/8), Ensco (ESV;$28 3/16), Noble Drilling (NE;$32 7/16), Parker Drilling (PKD;$4 9/16), Transocean Sedco Forex (RIG;$42 ¾) and R&B Falcon (FLC;$20 7/16).