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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Doug who wrote (4464)	1/12/1998 8:28:00 PM
From: Kerm Yerman	Read Replies (1) \| Respond to of 24927

Doud / Sell Off Pattern I don't have any specific statistics for comparison. But there is some ballpark data we can discuss. Let's look at both the integrated oils and prducers from 1985 to the present. Shares fell off in the later half of 1987, from late 1990 to early 92, mid 93 to the end of 94 and the last quarter of 97. The 1987 drop in share prices occurred over an approximate 6-month period and shares fell about 25%. The 1990 downtrend lasted about 16-18 months and shares fell approximately 33%. The 1993 period of falling share prices was from June thru the end of January, approximately a 7 month period. Loss in share value was approximately 28%. The current falloff in shares has lasted 3 months thus far. Keep in mind shares are still losing ground and we have yet to see a bottom. Thus far,

To: Doug who wrote (4464)	1/12/1998 9:49:00 PM
From: Kerm Yerman	Read Replies (2) \| Respond to of 24927

Doug / Sell off Pattern Funny things happening with this system. I didn't complete the previous message. Let me start again. I don't have any specific statistics for comparison. But there is some ballpark data we can discuss. Let's look at both the integrated oils and prducers from 1985 to the present. Shares fell off in the later half of 1987, from late 1990 to early 92, mid 93 to the end of 94 and the last quarter of 97. The 1987 drop in share prices occurred over an approximate 6-month period and shares fell about 25%. The 1990 downtrend lasted about 16-18 months and shares fell approximately 33%. The 1993 period of falling share prices was from June thru the end of January, approximately a 7 month period. Loss in share value was approximately 28%. The current falloff in shares has lasted 3 months thus far. Keep in mind shares are still losing ground and we have yet to see a bottom. Thus far, shares have lost approximately 35% in value. The scary part is the short period it took for such a large drop in prices. Let's look at this from another angle -- cash flow multiples. Since 1985 to October 1997, the average cash flow multiple for producers is 6.8X. The low side was 1985, when the multiple was 5.0X. Incidently, this multiple was flat from 1984 to 1985 and has been the lowest multiple realized since 1970 - even probably even more, my chart goes back to only 1970. On the high side, the multiple just exceeded 8.0X around January of 1993. For the past 3-1/2 years, the cash flow multiple has been very consistent, about 6.6X. Right now, the cash flow multiple stands at approximately 5.8X. The multiple has only been this low two times since 1970. This equals the low back in early 1991 as well as the 1984/85 period mentioned earlier. These are the statistics that formed the foundation for my comments over the weekend. I think we have seen most of the downside. Will the market take shares lower. Probably so, but not much lower in terms of percentage. I suggest we should anticipate a sideways type movement over the next 3 months, +/- 5% over closing prices of January 9th. Am I a buyer right now -- no. I think I'll watch the market and the oil & gas producers index for a short period of time first. However, it is also not too bad of an idea to cost average with purchases over the next three months. Shares accumulated over this period of time will look darn cheap two years down the road. However, I also want to express that one should be selective in their choices. I'm definitely a contrarian type investor. The gloom and doom perception at it's peak is a definite time to begin buying.