Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: aerosappy who wrote (44424)	5/27/2005 8:22:51 PM
From: Umunhum	Respond to of 206338

Regarding the Raymond James report, the section that you highlighted ("... despite continued growth in drilling activity....") would seem to indicate that for longer term investors owning oilfield services (e.g., OIH for the diversified play or RIG, PTEN, NBR, GW, etc. for the more focused stocks) will provide greater rewards that issues such as XOM, CVX, etc. that will be forced to use the drillers more and more to help maintain production. I disagree. The NBRs, PTENs, RIGs of the world should do well but the upside is going to be limited to a set premium over replacement value. I don't know what this premium will be but if it gets too high there will be a wave of newbuilds to mitigate this premium. Meanwhile the higher oil and Natural gas prices are going to go straight to the producers bottom line. New production will be more costly but they will make out like bandits on their existing production. the mid-sized E&P's will provide much greater upside than your CVX since the majors will need to buy them to stay flat. I also disagree with this statement. If we were just talking about CVX vs. the midcaps you might be right, but I bought options. From Kurt Wulff recent report: "Merger stocks Chevron (CVX) and Cimarex (XEC) along with small cap producers are off the most in stock price during the past two months when the median buy recommended stock lost 12% of equity value. Combined with low McDep Ratios those stocks might offer extra potential in the eventual rebound from the recent steep decline. The fundamental case remains solid with long-term oil price holding well above the level implied by stock price" mcdep.com My options on CVX cost only 6.1 points on a stock that trades at $55. If the stock hits his target price of $76 I'll be close to a four bagger. Personally, I think Chevron will be a lot higher by '08 and I plan on switching from the '07's to the '08's sometime over the next 12 months. I am overwhelmingly bullish on all the producers and believe options on the megacaps and independents are the way to go. I don't like buying stocks that trade less than a million shares a day or stocks with market caps under 1 billion. I agree that options on APC, APA, DVN, SU, CHK, etc will probably do better than options on CVX but the premium the market is giving CVX is far too low IMO. I would like to buy options on the Mid Caps too but I'm waiting to see the premium difference between '07 and '08. I believe we will definitely be in energy crisis mode by '08. I also have looked at options on the coal stocks but the premium is about double what the market is giving CVX. Railroads also might be a beneficiary of peak oil. I am going to have to do some homework on them.