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

To: Lee Fredrickson who wrote (4724)	12/10/1997 12:44:00 AM
From: Lucretius	Respond to of 95453

Someone E-mailed this to me. Interesting.... From Nightly Business Report... SEIFERT: High oil prices have encouraged many investors to look closely at the energy sector. And the oil services industry has produced rewards in recent months. But whether that performance can continue is another question. Jeff Yastine reports. JEFF YASTINE: Oil companies have been doing well and so have the companies that sell the drill bits, maintain the rigs, and scope out where to drill next. After a decade of laggard return the sector has made strong gains. Fidelity Select Energy Services Fund is up more than 20% from its year ago levels. Much of the activity is seen in the US Gulf of Mexico, once considered to be pretty much pumped out. But the number of offshore drill rigs is increasing as drillers armed with new technologies find new oil reserves. DAVID MONTOYA (Oil/Gas Development Consultant): The increase in oil drilling activity has a domino effect for all of the service companies that would assist in getting the well drilled and analyzed. The pipe companies, all of the equipment and service companies are in high demand because we're drilling a lot of wells right now, and the schedule is very strong out through the rest of this year. YASTINE: But while the service companies continue to benefit from the drilling boom, stock analysts are cautious about anyone stepping into the sector now at current stock prices. PHILIP DODGE (Analyst, Southeast Research Partners): Generally, we're more comfortable when oil and gas prices are low and may go up and stock prices haven't reflected that, than the current situation where it's almost the reverse. Oil and gas prices may go down and maybe the stock prices haven't fully reflected that possibility. That's the dilemma at the moment. YASTINE: Analysts like Dodge still favor a few stocks they say aren't overvalued; like deepwater offshore driller Reading and Bates, Schlumberger and Oceaneering International, a maker of remotely operated submersible vehicles. Despite the current high values of energy service stocks some analysts think the long term outlook for the sector remains bright. The worldwide demand for oil and gas keeps increasing and so does the ability of drillers to find new reserves. SEIFERT: What are you expecting for the first quarter of this year and the whole year? HILL: Well, we're looking at 10 percent for the quarter that just ended versus last year's earnings for the fourth quarter and that versus only 5.6 percent in the third quarter which was kind of a low point in the five years of earnings recovery that we've already been through. And we're looking for that, or the analysts I should say, are looking for that earnings growth to accelerate next year, 14 percent year over year gain for the first quarter and 15 percent for the full year over year. SEIFERT: And what about which sectors? Which sectors of the economy look like they're going to be the best performers? HILL: Well, if we look at the fourth quarter, energy clearly hit a home run, whether you look at how they came in versus expectations or year over year it was up 38 percent for those in the S&P 500 versus last year's earnings -- 7 percent over what was expected. And it was widespread between the majors and the smaller oil drillers and secondary oils. That's not expected to continue though into next year. We're looking for much more modest gains in our or the analysts are next year for the energy stocks. But they are looking for an acceleration in earnings gains in technology. Technology was struggling the first three quarters, had somewhat of a pick up in the fourth quarter, in both the computer and semiconductor sector and that's expected to accelerate. Jeff Yastine, Nightly Business Report, Miami. END ----Sounds like this was last night right? Nope. This was dated 8/6/96. Funny how the more things change, the more they stay the same. Same old worries, same old solid fundamentals. And they thought they stock prices were high then! Just goes to show you when you've got an industry as solid as this one, buy and hold. Let the weak have the crumbs. -Lucretius