To: Anthony Wong who wrote (7785 ) 1/13/1998 12:26:00 AM From: Tulvio Durand Respond to
Canadian oil stocks up 1.23% today. $19 oil predicted for 1988. Stock valuations can't get much lower said analyst Robert Hinckley, who follows the Canadian oils for Merrill Lynch & Co in New York.valuations are pretty much rock-bottom at the moment, but that's not to say they can't go lower,'' said analyst Robert Hinckley, who follows the Canadian oils for Merrill Lynch & Co in New York. ''But in a long-term sense, we're at the bottom of the cycle right now. ''The Toronto Stock Exchange's Oil & Gas subindex was up 70.09 points, or 1.23 percent, on Monday to close at 5,752.64.That level is about equal to the sector's value in early October 1996, and down over 28 percent from its October 1997 high of 8,031.57.A steep decline in world oil prices, caused by fears of oversupply and a cut in demand as a result of Asian financial crises, has been blamed for the battering Canadian oil shares.''We've gone from the penthouse to the outhouse,'' the chief executive of one large Canadian oil and gas producer told Reuters on Monday. However, several companies on Monday gained back some ground lost since December.Gainers included Talisman Energy Inc (NYSE:TLM - news; Toronto: TLM.TO - news), up 1.90 to 37.90, Alberta Energy Co Ltd (NYSE:AOG - news; Toronto:AEC.TO - news), Suncor Energy Inc (NYSE:SU - news; Toronto: SU.TO - news), up 1.30 to 44.45 and Canadian Natural Resources Ltd (Toronto:CNQ.TO - news), up 0.80 to 26.50. All are down sharply from their 52-week highs. Hinckley said he predicted a 1998 average benchmark West Texas Intermediate oil price of US$19 a barrel and a gas price at about the same level as 1997.''We're looking at (current) valuations that are just over four times cash flow and about 85 percent of net asset value, and they don't get much lower than that,'' he said. NYMEX WTI crude closed down 16 cents on Monday to US$16.47 a barrel and natural gas eased by just over four cents to end the day at US$2.002 per mmBtu.
