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Gold/Mining/Energy : Ensco International Inc. (ESV) -- Ignore unavailable to you. Want to Upgrade?

To: jim p. holcomb who wrote (763)	2/22/1998 9:03:00 PM
From: PashaBear	Respond to of 2005

Amen!

To: jim p. holcomb who wrote (763)	2/23/1998 1:36:00 AM
From: Czechsinthemail	Read Replies (3) \| Respond to of 2005

Jim and others, Oil prices are looking weak in response to the combination of an increased sales quota for Iraq and news of success in UN negotiations with Iraq. Since the whole sector has been heavily influenced by the ups and downs of oil prices, I think there is a good chance drilling stocks will sell off at the opening. But any drop should provide some good buying opportunities. I think the best will be companies like ESV that have relatively larger involvement in natural gas projects (maybe MDCO would also fit here) and the ultradeep drillers that have most of their business in multiyear contracts. RIG would be my favorite here, followed by DO. If they sell off as a group, I would expect these companies to do better going forward. What are your thoughts? Baird

To: jim p. holcomb who wrote (763)	2/24/1998 10:22:00 PM
From: Bill Li	Read Replies (3) \| Respond to of 2005

Jim, this is my gift for the first anniversary of this thread. February 23, 1998 Arvind S. Sanger (212) 892-3817 Robert Maina (212) 892-3450 Thomas R. Plante (212) 892-3457 OILFIELD SERVICES INDUSTRY WEEKLY RUMINATIONS RATING: Outperf. Change: None VIEWPOINT o Commodity fundamentals in better shape than generally believed: While oil prices continue to be weak, gas prices are surprisingly strong and supply-demand fundamentals should drive oil prices higher in the next few months. o Oil companies' spending plans are surprisingly resilient: We expect the oil companies to indicate only modest pullbacks from their spending levels. The reasons for this include economic viability for most projects even at current oil prices, belief that this oil price weakness is temporary and strong natural gas prices. o Oilfield service companies are in excellent shape and valuations reflect the risks: Oilfield service companies are generally very well positioned to withstand a modest downturn and valuations largely reflect the near-term earnings risks, particularly for some of the sectors with the most earnings risk. o Recommendations: We find the risk-reward very compelling at current levels and continue to rate the group Outperform. WF: OIL SERVICES: STOCKS FOLLOW OIL PRICES LOWER; RISK-REWARD PROFILE FAVORABLE Wheat First Union DATE: February 24, 1998 ANALYST: Yves C. Siegel, CFA (804) 344-6424 ASSOCIATE: Stephen Waxman (804) 344-6441 KEY POINTS: -- Oilfield Services stocks (measured by the OSX) fell 3.8% in tandem with the 6.0% decline in WTI crude oil spot price -- Over the past 10 years, the WTI crude price has fallen below $16/bbl for two periods lasting about 4-5 months each -- Long-term fundamentals, in our judgment, remain positive, driven by growing worldwide consumption, estimated to grow at more than 2.0% per annum through the year 2010 DISCUSSION: The Philadelphia Oil Service Sector Index (OSX) fell 3.8% yesterday, in tandem with the 6.0% decline in the West Texas Intermediate (WTI) crude oil spot price. The WTI price fell to $15.18/bbl on news of the imminent U.N. agreement with Iraq, its lowest level since late-March 1994. We believe that the bearish fundamental news regarding oil prices has largely been factored into the market. As noted before, these factors are (1) nearly a 10% increase in OPEC's quota to 27.5/bbl per day; (2) concerns regarding Southeast Asian demand; (3) the uncertainty regarding the situation with Iraq; and (4) warmer-than-average weather during this heating season, with degree-day indicators for heating-oil demand 7.1% below a year ago and 9.5% below normal levels. We believe that oil prices are not likely to remain at these depressed levels. Over the past ten years, the WTI price has fallen below $16/bbl two times and has stayed below this level for roughly four to five months. Oil consumption is elastic and lower oil prices tend to be a stimulant for demand. Additionally, we note that current excess productive capacity is still at relatively low levels, at about 5%, or less than 4 million barrels per day. We continue to be believers in the positive long-term outlook for energy demand. Even with a slackening in Far East energy demand, the Energy Information Administration continues to forecast that world oil consumption should grow by about 2% (or 1.5-1.6 million bbl/d) in 1998. Over the long term, oil consumption is expected to grow roughly 2.0% per annum through the year 2010 (when worldwide demand is expected to be nearly 24 million barrels per day, or 32%, above current levels).