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

To: Marc L. Greenberg who wrote (4185)	12/2/1997 8:07:00 AM
From: Teddy	Respond to of 95453

Dow Jones Newswires -- December 1, 1997 OPEC - Opportunities -2: Some Push Natural-Gas Cos. But most potential opportunities are seen in sectors of the oil business that have very little direct connection to oil. For example, exploration & production, or E&P, companies have been falling for more than two weeks, and fell again Monday as oil prices slid. But the earnings of many E&P companies that focus on finding natural gas in the U.S. won't be affected at all by lower oil prices. 'When they get hit, they all get hit,' said Alan Gaines, president of Gaines Berland Inc., a brokerage firm specializing in energy shares. He predicts that selling will dry up in January. Gaines said he likes small and mid-capitalization stocks, such as National Energy Group Inc. (NEGX) and Lomak Petroleum Inc. (LOM). Both focus on gas and could be good investments over the next six to 12 months, he said - 'if you can hold your nose and take the plunge.' ABN AMRO's Ferretti also likes gas producers, especially those with growing production, such as Comstock Resources Inc. (CRK) and the larger Burlington Resources Inc. (BR). Ferretti said he doesn't know when the current sell-off will hit bottom, but that he'd 'start bottom-fishing here.' Like the E&P industry, oil-services stocks declined Monday on the OPEC news - continuing a month-long slump that followed two years of strong gains. The oil-service sector is now roughly 25% off its highs. 'There's almost nobody willing to step up and buy these stocks,' said Schroder & Co. analyst James Stone. But investors are needlessly anxious about OPEC's move, he said; it won't immediately lead to oil companies' reducing the E&P spending that drives oil services. 'The difference between $20 oil and $19 oil doesn't have much impact on capital spending,' Stone said. If he's right, the oil-services stocks have been oversold and, once the selling subsides, will be primed for a rebound. 'These will eventually bounce back, and when they do, they'll bounce back with a vengeance,' said J. Marshall Adkins, an analyst at Raymond James & Associates Inc. Adkins likes NS Group Inc. (NSS), which makes drillpipe, mostly for natural-gas drilling, and Patterson Energy Inc. (PTEN), a land-driller whose rigs work mostly on gas wells. Stone said he likes Noble Drilling Corp. (NE), an offshore driller, and EVI Inc. (EVI), an oilfield equipment maker. The biggest obstacle for investors to overcome is the negative momentum in the market for E&P and oil-services stocks. 'There are a lot of values out there now,' said Adkins. -Loren Fox; 201-938-5267; loren.fox@cor.dowjones.com