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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (13991)	10/17/2002 6:41:16 PM
From: Tomas	Respond to of 206104

High oil prices expected to lift profits in patch But analysts say surge will be short-lived The Globe & Mail, Thursday, October 17 – Print Edition By LILY NGUYEN AND PATRICK BRETHOUR CALGARY -- The rising tide of oil prices will lift profits in the patch for the third quarter, but analysts expect that the surge will be short-lived. The earnings parade kicks off today with Nexen Inc. -- expected to report a 60-per-cent increase in share profit from the third quarter of 2001 -- and continues next week with large integrated firms such as Imperial Oil Ltd. and Shell Canada Ltd. Crude oil prices, which are up nearly 50 per cent since the start of the year, will buoy profits throughout the sector, analysts say. Natural gas prices, too, have been on the rise, hitting $4 (U.S.) a thousand cubic feet recently from under $3 in early August. "All companies should do better year over year because of commodity prices," said Brian Prokop, an analyst at Peters & Co. in Calgary. The rise in crude, currently hovering just below $30 (U.S.) on the New York Mercantile Exchange, was driven first by war worries. Analysts say fears of a supply crunch this winter are now helping to keep oil prices high, with natural gas expected to continue to match movements in the crude market. But analysts are still looking at strong third-quarter results as a largely one-off event, noting that investors have not bid up oil stocks in response to the rosy earnings outlook, nor have any firms rolled out lavish capital spending programs. Instead, most of the oil patch has concentrated on paying down debt and otherwise strengthening the balance sheet, said Tom Ebbern, managing director of institutional research for Tristone Capital Inc. in Calgary. "Most of this is building up the war chest for future activities," he said. With natural gas price gains trailing oil through most of the third quarter, Mr. Prokop predicted companies focused on oil will benefit the most from the commodity price moves. That includes Canadian Natural Resources Ltd., Nexen and most of the integrated oil companies such as Petro-Canada and Shell Canada. Talisman Energy Inc.,with 70 per cent of its production coming from oil, will also fare well this quarter despite reduced production growth prospects in 2003, he said. Steve Calderwood, an analyst with Salman Partners in Calgary, noted gas prices enjoyed a jump in September as an intense tropical storm took its toll on gas suppliers in the Gulf Coast and shut down a major Gulf port. But that jump was too late to make a big difference on third-quarter earnings, he said, adding that gas prices could soon return to their pre-storm levels. Mr. Prokop cautioned that while commodity prices often account for big changes in profit, investors should also focus on the operational performance of each company. "The numbers will be good, but we realize it's prices. What you want to look for in each company is, are costs staying down, or are they going up? The things a company can control, are they controlling them?" ... globeandmail.com