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

To: Tomas who wrote (87224)	2/14/2001 8:10:01 PM
From: Tomas	Read Replies (1) \| Respond to of 95453

Over the next 12 months, oil field service stocks will likely outperform the market Oil & Gas Journal, last week's issue Most of the gain will take place by midyear (see related story, p. 22), according to financial analyst UBS Warburg, which also states that, during past US recessions, oil field service stocks declined by 11% on average, while the S&P 500 index rose by 3.1 %. However, if stock price performance during the 1981 recession period is excluded from the analysis, then the average decline in oil field stocks during recessions is 2%. "The oil field service stocks are generally insensitive to the trends in interest rates and over the past 30 years have averaged gains in both rising and falling interest rate environments," UBS Warburg said. "Since 1970, oil field stocks have gained an average of 10.8% during falling rate periods and slightly underperformed the S&P 500... However, this relationship is inconsistent over the decades, as oil field stocks posted strong gains and significantly outperformed the S&P 500 during the 1970s and the 1990s." Worldwide 4th quarter E&P earnings for US integrated companies posted an increase of 74% to $8.6 billion. According to UBS Warburg, the increase in earnings for the group of US integrated firms it tracks was the result of higher US oil and natural gas prices and strong refining margins. "These factors should more than offset the generally weaker marketing margin conditions and our expectations for dramatically lower chemical earnings. In total, we forecast an 86% improvement in fourth quarter 2000 earnings (see related story, p. 31)." The analyst predicts that this sharp rise in upstream profitability was supported by respective increases in benchmark prices for US crude oil and natural gas of 30% and 131 %. The analyst also stated that worldwide 4th quarter downstream earnings were up 623% vs. a year ago to $1.5 billion, as strong refining margins offset weaker retail marketing margins. "Despite continued relatively healthy refining margin conditions, we expect downstream profits to fall 17% on a sequential basis," the analyst said. "Finally, we .expect chemical earnings to drop by 88% vs. the prior year ...and be down 81% from third quarter levels."