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

To: John Carpenter who wrote (3980)	11/30/1997 2:34:00 AM
From: Steve Childs	Read Replies (1) \| Respond to of 95453

I love this current 'bear' market in oil drillers. I hope it drives CDG to $45, FLC to 27, PDE to 20, KEG to 22 and so on. It is creating the buying opportunity of the next three years. Let's say OPEC raises output by 10%. Since they produce 40% of output, that will theoretically decrease price by 4%. At $18.50 per barrel, that reduces the price to $17.75. Increased output of the rest of the world will decrease it another $.75, so we will end up at $17 per barrel. To my thinking, that will ultimately raise the oil drillers 50% from the lows they are about to see in their stock price, as opposed to 75% we could have seen at $19-21 a barrel. Aside from these cycles, the oil drillers are golden.

To: John Carpenter who wrote (3980)	11/30/1997 9:34:00 AM
From: dougjn	Read Replies (2) \| Respond to of 95453

<<in water 3,000 feet and deeper, accesible by only 17 percent of the world's current active floating fleet.>> Most interesting. I know Rig and Do each have some of this 17%. Also GLM, right? RB? Do you know how its distributed, who has what? Regards, Doug

To: John Carpenter who wrote (3980)	11/30/1997 2:07:00 PM
From: John Guild	Read Replies (2) \| Respond to of 95453

John Carpenter writes: >In RIG's 1996(the most current available) annual report, the firm mentions that its business assumptions are based on crude trading in the $17 to $19 range for the foreseeable future. We are currently trading at around $19.12. Current world events are fully consistent with RIG's game plan< WRONG. The only folks bringing original money to the table are the oil/gas producers. Everyone else, including RIG, bellies up to grab a share. Whether RIG's equipment is utilized has less to do with RIG's 'game plan' and more to do with the operator's budget and rate of return based on the projected product price. As the price drops, operators will de-emphasize drilling and start emphasizing field workovers and acquisitions. As one who's been involved with oil/gas company budgeting process for many years, witnessing boom-buster-boom-bust cycles, I'm all too familiar with the process. If prices continue the current downward trend, RIG along with NE, FLC, DO, PKD, etc. will be dropped like cheap dates. It happens folks, prepare yourself. BTW, lets kill several LOL's that I've seen expounded on this thread: 1. "Oil/Gas companies have to drill or they will die." WRONG. A review of history will wipe this fallacy away. Check out the mid '80's. (Better yet, live through it, ah!) 2. "Boom-bust cycles have 10 year periods; therefore, we're in the early stages of a boom cycle." WRONG. Past performance does not foretell future performance. If it did we've be rich! 3. "Contracts have to be honored." SO WHAT. The vast majority of contracts are still written on short terms with options to renew. Options simply will not be renewed and rigs will stack. 4. "Driller and service company stocks have reached their bottom." DO NOT BET THE FARM ON IT. Check out the semi equipment stocks, the disk drive stocks, the network stocks, Y2K stocks, financial relender stocks, gold stocks, etc. These folks have been touting a bottom all through a bloody painful downward correction. The bottom will come when the wise believe the story has changed. Until then growth rate among drillers will be revised downward and stocks will reflect this downward trend. 5. "There's a shortage of rigs. Rigs are not build over night, They're not like home PC's." DREAM ON. Shortage is directly proportional to demand. Take away demand and the shortage goes away. Poof, just like magic! Never forget- the only reason oil and gas service companies exist is because oil and gas operators do. Without the operators, the rest of the crowd is just heavy metal, ah! Hey, its a beautiful Sunday afternoon in The Woodlands, Texas. What I'm I doing inside. I think I'll go toss some balls with the kids. Have a nice day :-) -John Guild, P.E.