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

To: John Carragher who wrote (26194)	10/7/2003 8:15:08 AM
From: Tomas	Read Replies (2) \| Respond to of 206085

E&P Reinvestment Economics - Raymond James' Energy "Stat of the Week", October 6 beacon1.rjf.com

To: John Carragher who wrote (26194)	10/7/2003 11:30:16 AM
From: Ed Ajootian	Read Replies (4) \| Respond to of 206085

Refiners’ profits have been on fire By Melissa Francis CNBC Analysts divided on whether earnings spike will last An ARCO petroleum refinery outside of Los Angeles maintained a busy production schedule as local gas prices rose to over two dollars last August. California's gas blend is specific to the state and the balance between supply and demand is very tight. Oct. 6 — The latest quarterly earnings season kicks off this week and the energy sector seems poised to dazzle investors. From big oil companies like BP and ExxonMobil, to independents like Valero, high prices at the pump are going to fatten third-quarter bottom lines. But can this sector keep it up? Or is it time for investors to take their money off the table? THE ENERGY sector has been on fire. Earnings in this group grew by 41 percent in the second quarter and 180 percent in the first quarter, according to Thompson Financial. In the third quarter, the widespread power blackout in the eastern U.S. and pipeline and refinery problems shocked supply. Add that to falling crude oil prices after the Iraq war, and margins for refineries expanded. That has made companies like Sunoco favorites with investors. But those lower prices could evaporate. OPEC has pledged to tighten the supply of crude oil, and the price trend has already reversed. So what does that mean for the future of refineries? “Generally, a spike in crude oil prices isn’t that good for refineries — particularly in this time of year when we’re sort of in the lull between the real demand for winter fuels and lull for gasoline,” said John Kilduff, and energy analyst at Fimat USA. “So when the feedstock gets expensive, it’s not really a great time for them.” But others say aren’t counting out companies like Amerada Hess just yet. “What companies need — Valero, Sunoco, and the other independents — what they need really is to see a robust economy and the demand will continue to grow,” said Fadel Gheit, an energy analyst at Oppenheimer & Co. “Regardless of what happens to oil prices, they will be able to pass along whatever additional cost to the consumer.” Some analysts say the safer bet in the group is with big oil companies like ExxonMobil and BP. When the price of crude oil is high they make money on that. When it’s low, they enjoy a good margin after they refine it into gasoline. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ If you believe (as I do) that there is a good chance that crude oil prices will be back down to the low 20's by the end of the year, you wanna own refining stocks. Those guys are gonna clean up in that scenario. My favorite (in fact the only refiner I own at this point) is Giant Industries (GI).