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

To: isopatch who wrote (82821)	12/27/2000 11:22:09 AM
From: Razorbak	Read Replies (3) \| Respond to of 95453

"Analyst Likes Land Driller Stocks in '01" By Emily Church & Lisa Sanders, CBS.MarketWatch.com Last Update: 10:59 AM ET Dec 27, 2000 NEW YORK (CBS.MW) -- Investor expectations that energy prices are heading high enough to prompt better-than-expected profit estimates are underpinning stocks of U.S. land drillers, according to analysts. Although investors on Wednesday sold off positions in the group, the land drillers have been trading at or near 52-week highs. Gary Russell, an oil service analyst at Frost Securities, noted there is no fundamental reason behind the decline. Most likely, investors are taking profits after sending the land drilling group up 7.1 percent Tuesday. "The reason the land driller stocks are trading at or near 52-week highs is due to extremely strong North American natural gas fundamentals," Russell said. "Investors in general view land drillers as a good play on that theme." Russell pointed out that land rig fleets are at or above 90 percent utilization, which is leading day rates to go "meaningfully higher." "Given the outlook for gas oriented E&P company spending in 2001, which should be up in the range of 20 to 25 percent, we expect day rates to continue to trend higher," Russell said. "Accordingly, we expect land drilling stocks and oil service stocks in general to continue to trend higher." On Wednesday, the Philadelphia Oil Service index ($OSX: news, msgs) , which rallied 5.6 percent on Tuesday, declined 2.7 percent to 121.97. Meanwhile, February crude futures added 29 cents to trade at $26.93 on the New York Mercantile Exchange, while the high-flying January natural gas contract declined 10.5 cents to trade at $9.70. Shares of land drillers Nabors Industries (NBR: news, msgs) , Patterson Energy (PTEN: news, msgs) , UTI Energy (UTI: news, msgs) , Helmerich & Payne (HP: news, msgs) and Unit Corp. (UNT: news, msgs) are all trading near 52-week highs, "beneficiaries of high gas prices and growth in demand," analyst Allen Brooks of CIBC World Markets said in a note to clients Wednesday. All but Unit Corp. were trading lower in recent dealings. The gas-related group rose Tuesday "due to a shift in investor sentiment, and possibly the return of some momentum investors, based on the winter weather gripping the country and the perception that with the commodity prices continuing to move higher, analysts' estimates for energy companies will be revised upwards," he said. The group is expected to stay strong "as long as investor psychology is focused on winter weather and its impact on gas supplies, gas prices and producer earnings," he said. "The large cap oilfield service stocks will also benefit from money flows into the group," he said. -------------------------------------------------------------------------------- Emily Church is a managing editor of CBS.MarketWatch.com in New York. -------------------------------------------------------------------------------- Lisa Sanders is a Dallas-based reporter for CBS.MarketWatch.com. www2.marketwatch.com