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

To: Tomas who wrote (87658)	2/18/2001 9:49:42 PM
From: Tomas	Read Replies (1) \| Respond to of 95453

E&P pot of gold at end of rainbow Upstream, current issue (February 16-22) By Robert Smith Mid-size US E&P companies saw their share prices advance 118.5% last year. Large domestic companies got a 94.1% bump in stock prices while prices of small US E&Ps ramped up 79.8%, according to a study by John S. Herold. It was those high-flying commodity prices that put the wind beneath the wings of the indies. The betting now is that this performance, specifically the earnings growth and cash flow build-up that has driven it, will translate into an outpouring of capital expenditure increases this year. Salomon Smith Barney, for one, has been steadfast in predicting a 20% average year-to-year increase in 2001 spending, led by the independents but including a substantial component of big oil dollars. There is no reason why the capex spigot should not open wide given the underlying dynamic of oil and gas supply-demand and resulting prices. It is already starting to happen among the small, medium and large-cap independents on the shelf and on land from the US Gulf coast to Canada. But the big integrated oils saw only a 10.1% gain on the street last year. That is in part a reflection of their lacklustre production growth, averaging less than 1% over the past three years. The question is whether those behemoths ExxonMobil, BP and, shortly, ChevronTexaco, along with Royal Dutch/Shell, Phillips, Conoco and the rest of the integrateds are finally ready to charge into the capex jungle. For years now, they have been positioning themselves for the elephant hunts in deep water where the stakes are daunting, even by their standards, and the lead times to pay-off already stretch into the next decade. There seems little to chill expectations of a bumber year of E&P activity but a continued reluctance by the majors to put their money where the oil is could bring it closer to room temperature.