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

To: RGinPG who wrote (15292)	3/18/1998 12:32:00 PM
From: Czechsinthemail	Read Replies (2) \| Respond to of 95453

RG et al, With both oil prices and drilling stocks up today, I think investors get to make some decisions about whether they want to bet on a bullish oil price scenario or a more bearish one. My guess is that companies like RIG and DO that are most heavily committed to long term deep drilling contracts should continue to do relatively better in the weak oil price environment. In this sense they are safer. But other companies have been more heavily sold off and I think carry more rebound potential as oil prices recover. If oil prices move back up considerably, the land drillers will probably be the biggest winners. If they increase more modestly, jackup and shallow offshore drillers seem like the best plays since they will have the optimum combination of full rig utilization and quick pass-through of dayrate increases. So far, I'm not convinced that we've seen the end of the falling oil price scare, but I'm willing to consider the possibility that we're right around the lows and that the end is near. My most recent buying has been in FLC and ESV. They are both among the most heavily oversold and should have more upside potential on the rebound. They also have a noteworthy strength in expected earnings for this quarter. As we've all seen, the movement of the sector takes companies up or down with it. But there are factors influencing the relative up and down movements, and in about a month one of those will be earnings announcements. With all the other uncertainties, I've wanted to be in the companies that will be showing the strongest earnings growth this quarter. I've felt a bit reluctant to buy RIG at these levels, simply because I've thought the others were more oversold and offered better bargains. But if the "rally of the damned" continues and yesterday's dogs continue to show greater relative improvement on the recovery, I may sell and shift some of that money to RIG. I think its earnings growth is bulletproof regardless of oil prices. good luck, Baird

To: RGinPG who wrote (15292)	3/18/1998 12:46:00 PM
From: John Carson	Read Replies (3) \| Respond to of 95453

I am not sure if this has already been posted. Is Venezuela serious? Any comments? Crude jumps 24 cents a barrel to $12.50 as Venezuela calls for cutback March 18, 1998: 8:46 a.m. ET LONDON (Reuters) - World oil prices rallied from nine year lows Wednesday after Venezuela called for an agreement among all oil producers to cut output. Brent blend crude, the world benchmark grade, was up 24 cents to $12.50 a barrel in mid-morning trading having dipped under $12 Tuesday, its lowest level since November 1988. OPEC-member Venezuela is seeking agreement between the Organization of the Petroleum Exporting Countries and non-OPEC oil producers to withdraw up to two million barrels per day (bpd) from the world market to boost prices, the head of Venezuela's state oil company said Tuesday. Luis Giusti, president of Petroleos de Venezuela PDVSA), said Venezuela had contacted oil producers both inside and outside OPEC to discuss the proposal. He said Venezuela was seeking a worldwide reduction of "anywhere between 1.5 and 2.0 million barrels a day." Venezuela has dismissed OPEC's quota system as outdated and given notice that it would cut oil output as part of a concerted effort involving both OPEC and non-OPEC producers. Venezuela's other condition appeared to be that it would cut only from its current production level, which is well above its long-ignored OPEC quota. Norway said Wednesday it hadn't had any contact from OPEC, but Oman recently said it would be prepared to cut if OPEC members did the same. Oil traders remained skeptical of Venezuela's move and many expected prices to stay weak. Venezuela's call for an OPEC/non-OPEC agreement is a "red-herring," said Nigel Saperia, managing director of oil trading at Bankers Trust International in London. Such a deal is "unlikely, although there is no doubt that oil producers are feeling the pain," he added. He said oil prices haven't yet hit their lowest level for this year, not discounting occasional rallies. Analysts have predicted oil prices below $10 a barrel due to an oversupply of between one and two million bpd. OPEC alone pumped 1.2 million bpd above its self-imposed quota in February, according to a Reuters survey, and non-OPEC members also have boosted output. OPEC has rarely looked in more disarray, and last week announced a two-week delay in a market review meeting. The group's linchpin producer, Saudi Arabia, is locked in a dispute with Venezuela and has hinted that it won't support emergency talks while others cheat on their quotas, a remark aimed mainly at chief violator Venezuela. But Venezuela has refused to cut a single barrel as part of an OPEC-only deal, while a PDVSA official rubbed salt into the wound by repeating allegations that Saudi Arabia also is cheating on output. The oil glut this winter has coincided with faltering demand from cash-strapped Asian buyers, warm winter weather in the West and brimming oil storage tanks. Further agony is in prospect later in the year when a United Nations plan to more than double the value of its oil-for-food deal with Iraq will see several hundred thousand more barrels of oil inundating markets.