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

To: Teddy who wrote (2663)	11/1/1997 2:36:00 PM
From: Teddy	Read Replies (1) \| Respond to of 95453

An old article from The Wall Street Urinal Interactive Edition -- June 19, 1997 about analyst Oil Service By CARLOS TEJADA Staff Reporter of THE WALL STREET JOURNAL If you were an oil-service analyst last year, it was hard to miss. The typical analyst in this group saw his or her stock picks soar 53%, as a steady increase in demand for oil kept producers seeking and pumping. Service companies, which supply drilling equipment, software and technical expertise to exploration-and-production companies, have been running flat out since 1995. The top analysts last year emphasized off-shore drilling companies. As more offshore rigs went to work and rig shortages developed, drillers' rates increased sharply, notes Mark S. Urness of Salomon Brothers, the No. 1 stock picker in the group last year. "A rising tide lifts all boats -- or rigs, in this case," he says. Mr. Urness, who was also an All-Star stock picker a year earlier, posted a 116% return. He concentrated on providers of "jack-up" rigs, which stand above the ocean's surface on retractable legs. Jack-up providers such as Ensco International and Global Marine saw their share prices more than double last year. Mr. Urness recommended both, and also had a 121% gain in Noble Drilling and a near-double in Rowan Cos. The Salomon analyst expects the oil-service boom to last three to five years. However, in April he downgraded many of his 1996 picks as service companies began to schedule the building of new rigs. "Our fear is the market will perceive a potential risk of overcapacity," Mr. Urness says, though he himself doubts that overcapacity is a worry any time soon. Currently, Mr. Urness has buy ratings on deepwater concerns like Falcon Drilling, Transocean Offshore and Diamond Offshore Drilling, and on large diversified service companies like Halliburton and Schlumberger. Second in the competition was Sam Z. Albright of Jefferies & Co., a two-time All-Star who has covered oil services for the past 20 years. At various times last year, Mr. Albright recommended 42 oil-service stocks. He amassed a 97% return, mostly with bullish calls on offshore drillers like Cliffs Drilling, Ensco, Falcon and Rowan. Cliffs, a Houston company that serves both on-shore and off-shore drillers, more than quadrupled, rising to $63.25 from $14.75. Mr. Albright says he lost a chance at even fatter gains by being cautious on drillers like Transocean Offshore and Diamond Offshore. "Anything short of flat-out bullish was wrong," he says. The Jefferies analyst expects the boom in services to last at least until the year 2000, but he will take less of a stock-picking role in the future and devote more time to new duties as Jefferies' director of research. His successor in oil services is Roderick D. McKenzie, formerly of Southcoast Capital and the fourth-best stock picker in the sector for 1996. In third place, making his All-Star debut, was John T. Reynolds of Goldman Sachs, who achieved an 88% return. He, too, reaped king-sized gains from Ensco, Global Marine, Noble and Rowan. He also had a 146% gain in Marine Drilling. But smaller gains in other stocks, plus a loss in Input/Output (a seismic-measurement company in Stafford, Texas) pulled his return below that of the top two finishers. Mr. Reynolds remains bullish on oil-service stocks, particularly Schlumberger, the French concern with the largest market capitalization in the business. He says investors could also benefit from potential mergers within the sector.