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

To: waverider who wrote (14269)	3/9/1998 10:57:00 PM
From: Lucretius	Read Replies (1) \| Respond to of 95453

How are they acting the same? Sorry but this comparison drives me nuts! Couple of things: Rand: get over yourself. The rise in oil services is due to supply and demand imbalances for those services. Nothing more. Just like any other commodity, when the price drops (dayrates for rigs) nobody wants to do it, and supply begins dropping until demand picks up again and you get an imbalance. The remedying of that imbalance is the 7 to 10 yr run that everyone is looking for in these stocks. Diamond: Semi's declined because of overcapacity. Everybody and their grandmother went out and built a semiconductor factory and spit out chips. (much like dumb Texans did w/ oil rigs in the late 70's and early 80's until the bust). Drillers are not declining because of overcapacity. in fact, the opposite is true. They are holding their own in the current environment precisely because there is an undercapacity. If S & D were even balanced today, declines in stock prices would be much greater than we have seen. NE would go back to $10. Instead, we have declines based on crude fears making oil drilling in the S-T less economically viable, which only furthers the lack of supply of rigs. (ie- who in their right mind would finance a speculative rig build based on 3 yrs out in the current uncertain oil environment-- No TX bank I know of! I don't even know many VC's that would and why pay a driller to build a new one--as many E&P co's have been doing-- if there are others available). Dayrates are not likely to decline. Check the news, and you'll see all of the newbuilds. These newbuilds don't take place unless there aren't rigs avail to do their job. DEMAND STILL EXCEEDS SUPPLY. Dayrates for offshore drillers have yet to slow their rate of increase unlike the land drillers (note there are no new builds in the land drillers cause of their plentiful supply). They may very soon, but this will not eleviate the problem which producers face. there aren't enough rigs, and if producers whine for lower dayrates and demand actually does slow, nobody is going to build new ones, yet nature will still take 5 to 8 rigs a yr. Something will give in the S & D scenario. Either co's will continue to pay for higher dayrates and more rigs will be built until S & D is once again in balance thereby assuring stable oil prices in the future, or they won't drill, supply of rigs will become even more constrained, oil prices will climb because of the lack of reserves and an oil boom will begin. One way or another, these stocks are going up. We just have to be patient and wait for father time to work his magic. ---same thing will happen in 10 yrs to the semi's that has been happening to oil services over the last 3 yrs. Let's keep an eye out, and we can catch the bottom. :) -Lucretius

To: waverider who wrote (14269)	3/9/1998 11:09:00 PM
From: Czechsinthemail	Read Replies (2) \| Respond to of 95453

Diamond, Drilling companies and chips are similar in that they are both cyclical growth companies. This means that your success in investing in them is likely to depend on where you are in the cycle and how the investment community is appraising where you are in the cycle. Though we're going through a short-term drop in crude prices, we don't have the kind of overcapacity among the drillers that signals a cyclical top. If anything, weak crude prices are likely to slow the arrival of that top, since many companies will slow their expansion programs. Also, although the market seems to treat drillers as a group, there are differences among the individual companies. Land vs. offshore, deep vs. shallow drilling, oil vs. gas drilling -- these all affect how companies do. While they're all in the same ocean, they're not necessarily in the same boat. Notice the performance of RIG, which was one of the strongest companies in the recent rally and today had the smallest decline today among the offshore drillers (2.7%). Its particular strength is in its long-term contracts, which essentially mean it can ride out the decline in oil prices with little or no impact on its earnings even if many production budgets get cut back. I think a similar case can be made for companies more active in natural gas drilling. The gas market is a more locally-oriented market than oil. It is less impacted by OPEC production increases or drops in demand in Asia than crude prices are. The strength of natural gas prices may keep much of the Gulf jackup drilling going strong even if crude prices remain weak. So, while many may opt to sell their drilling stocks in hopes of buying back lower, an alternative strategy is to hold companies likely to outperform while crude prices are weak with a readiness to jump into the others when there are clearer signs of crude strengthening. My guess is that the deepest drillers such as RIG and DO and perhaps the gas-oriented jackup drillers such as ESV may do best in this environment. I think that makes them the best buy and hold candidates for those who don't sleep easily. For those with lots of patience, the land drillers may pay off the biggest down the road, but there are likely to be lots of bumps and dips along the way. Baird

To: waverider who wrote (14269)	3/10/1998 5:50:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

Diamond, at the risk of starting internecine warfare, Thean's remarks are ludicrous. There is nor statistical evidence to favor the idea that TA works, but there is plenty of statistical evidence to indicate that it does not. I don't care whether we are talking about Bollinger bands, P&F or Japanese candles. And the idea that you must approach it with an open mind is like saying that modern geographers need to consider the possibility that the earth is flat, ot that medical practitioners need to consider the possibility that wearing a copper bracelet is an effective form of arthritis treatment. One of the major reasons that western civilization flourished while other civilizations languished is that the west had an alphabet which allowed people to benefit from the knowledge of others. One major goals of education is to obviate the need to reinvent or rediscover that which has already been discovered. TA has been studied to death by mathematicians and statisticians. They have come to the conclusion that there is no memory in past price and volume histories. I will now put on my battle helmet and flak jacket and await the inevitable rebuttal from true believers. Regards, Paul