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

To: sand wedge who wrote (13155)	2/28/1998 8:58:00 PM
From: Bill Li	Read Replies (1) \| Respond to of 95453

Research Alert! 1. The following cos ests have been cut by 5-10% for both 98 and 99 over in ML: BHI BJS CXIPY/F GGY RON DI HAL NOI PGO SLB SII WAI WII WG DO ESV GLM * Reason ---the high probability that oil prices will remain weak and under pressure over the near term. * Maintaining their positive intermediate and long-term stance for the oil service group, since that 1998 and 1999 numbers are already being priced into the group. * Believing that the current weakness in oil demand growth will be short lived (even in Asia) and that the excess supply of oil is short-term in nature. 2. The DLJ energy conference ended yesterday (Feb. 27,1998) on a high note, with the offshore drillers making a very spirited case for continued strong activity levels, with any downturn that may occur being relatively modest and short-lived. Some of the key conclusions at the end of the conference were: o Offshore drillers remain very optimistic about business and see minimal earnings risk: The offshore drillers have most of their rig time contracted for 1998 and continue to see rigs roll over at higher rates. The strength in natural gas prices and strong deepwater interest are the primary reasons for their optimism. o Consolidation more likely among service companies than drillers: The offshore drillers have all considered consolidation but do not see the synergies that service companies do. o So far the producers have largely been all talk, which will cause no rate reductions: The drillers and service companies will not lower rates unless demand declines. 3. Review of Consolidation Trends and Recent Oil Price by Goldman Sachs (February 27, 1998) * They continue to believe that 1998 will be a year of positive broad-based industry consolidation. * Although a falling oil market may serve to accelerate companies' desires to consolidate (and thus evidence some synergy-derived growth), they believe the key consolidation driver is the fact that the customer base of the oil service industry has begun to focus on Exploration and Production growth for the first time in more than a decade. * They reduced their 1998 oil price forecast, to $16 per barrel, WTI posted. * Near-term, our preference is to remain with leading deepwater and/or international offshore drilling companies.

To: sand wedge who wrote (13155)	2/28/1998 9:09:00 PM
From: david james	Read Replies (1) \| Respond to of 95453

Considering the billions of dollars involved, you've got to wonder whether someone is going to find a way to pick a fight with Venezuela soon. . . Venezuela warm to OPEC meet, but won't drop output CARACAS, Feb 27 (Reuters) - Venezuela's Minister of Energy and Mines Erwin Arrieta said he was warm to the idea of an emergency meeting of OPEC members to discuss falling oil prices, but that Venezuela would not reduce its output. ''We won't reduce oil production by even one barrel,'' he told reporters at Miraflores presidential palace. Arrieta said he had not yet received an official invitation to an emergency meeting of OPEC members floated Thursday by Indonesia, but that he would like any talks broadened to include non-OPEC oil producers as well. ''Venezuela would agree to such a meeting and also suggest the need to invite non-OPEC independent producers, such as Mexico, Russia, Norway, Egypt and Oman,'' he said. Venezuela, long viewed as OPEC's largest quota buster, pumped a record 3.4 million barrels per day in February, over 700,000 barrels above its official quota. OPEC linchpin Saudi Arabia has said it wants meaningful quota adherence from cartel members before it considers a variety of measures, including attending the proposed emergency meeting. Arrieta said, ''There've been no official accusations of violating quotas.'' Venezuela plans to double output over the next ten years as part of a strategy to boost market share and stabilize revenues for the oil-dependent country, even if prices wobble. ''Venezuela is and remains my team, and I place its interests above those of OPEC,'' Arrieta said, reiterating that OPEC's quota system had run its course and no longer worked. Asked if Venezuela would follow other OPEC members if they reduced output, as Indonesia has suggested, Arrieta said: ''If OPEC members reduce their production, others will simply take their place''. ''Venezuela is not going to loose-out knowing full well that everyone else is overproducing,'' he added.