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

To: isopatch who wrote (88187)	2/27/2001 10:37:01 AM
From: Tomas	Read Replies (3) \| Respond to of 95453

Matt Simmons: What 2001 Has In Store - WorldOil, February 2001 The coming year will likely be a continual series of energy surprises. OPEC oil ministers seem intent on keeping stocks at razor's edge, now that our financial markets seem to view even a few hours of extra energy supply as "glut." As long as this "just in time" mentality frames the mentality of how the oil system needs to work, we will stay on the brink between a true oil shortage and a real price collapse. Until the faulty data problems of the energy system are corrected, a great risk exists that we will run oil supplies to the precipice and accidentally create real oil shortages, not just unpleasantly high oil prices. There is an urgent need to finally discover what the minimum level of petroleum stocks really are, before we find out this answer after we drain stocks too low. There is still little data for energy planners to study on what decline rates the key oil fields of the world are now experiencing. This lack of key supply data makes all supply forecasts very incomplete. There is ample data which suggest that production is declining in almost all oil basins throughout non-OPEC producing countries. And there is mounting data which suggest that most OPEC producers are also beginning to experience declines in many early giant fields. There is growing evidence that supplies of rigs and other forms of drilling equipment are getting as tight as last experienced at the end of 1997 and early 1998. When spare rig capacity is gone, it will be impossible to keep supply growing to even offset these existing-field decline rates. The petroleum system is badly in need of expanded tanker capacity and more refineries, along with a major expansion in petroleum pipelines. The vast majority of oil observers passionately believe that oil prices will soon fall back to the levels most non-industry users enjoyed for almost two decades. But the same people held this belief a year ago. If prices do return to their "historical norms," this will also return the entire petroleum system back to the horrid financial returns which caused capital to flee the industry in droves. Too many companies spent almost a decade finding new ways to cut costs. No matter how much was cut, the financial returns stayed too low. The reason was simple: the price paid for oil and gas produced was too low. If prices fall back to this historical norm, it will also bring back the low returns that ensure no expansion of petroleum capacity. The industry is now badly in need of a long term "blueprint" for recreating excess capacity throughout the energy complex, which entails an expansion in the rough magnitude of about 30%. At the same time, most of the existing energy base - from tankers to refineries to pipeline and power generation - needs to be rebuilt or totally refurbished. The cost of this project will run into trillions of dollars. Full article: worldoil.com

To: isopatch who wrote (88187)	2/27/2001 11:41:28 AM
From: Charles Macdonald	Read Replies (3) \| Respond to of 95453

Iso- I agree. I see it as a bullish sign that lease rates / POG moved despite the increase in the dollar. My core metal holdings currently are HGMCY, GOLD, NEM, FCX, and DROOY. My style is more of a buy and short/mid-term hold (I am attempting learn more of the true short term trading art)so I have been simply building positions in HGMCY, GOLD, NEM, and FCX over the past months. DROOY is purely a speculative play. With the leverage potential it has, I could not pass it up. The challenge with Drooy will be when to take money off the table if it decides to run. I have never been good at letting my money ride and given a gold run DROOY could move and move big. We will have to wait and see. Are you trading/holding/building/cashing any golds currently? Regards.