Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: karen m. blankenship who wrote (17265)	3/30/1998 11:36:00 PM
From: marc chatman	Read Replies (2) \| Respond to of 95453

Karen, OPEC is not going to hold another emergency session and take additional action based on some news reports that the market has given its "thumbs down." This so called "thumbs down" is a trading reaction and has nothing to do with the supply/demand dynamics of the oil market. Having said that, the trading can certainly take the price of oil much lower in the short-term. If I were buying oil, I would sure wait to see if the price gets lower. So I think we can expect to see a lack of buying interest over the next several days, at least. And where there are few buyers, even a moderate number of sellers and short sellers can take prices lower. The same scenario is likely to play out with the stocks in the drilling and service sector. Will any of us (or, more importantly, will any institution) start buying tomorrow RIG, for example, at 53 if there is a good possibility it could be had next week in the 40's? I think these stocks drop gradually on declining volume for several days until they get to perceived bargain levels. I agree with some comments made earlier that it is not likely we will drop below the lows of last week. by the time we get anywhwere near those levels, the Cramers of the world who missed out last week will be jumping all over these stocks. One last comment -- expect to see virtually every analyst come out and trash the OPEC pact and the sector so that their firms can get in at lower prices. And remember these are probably the same analysts who praised the pact a week ago.

To: karen m. blankenship who wrote (17265)	3/31/1998 12:07:00 AM
From: Czechsinthemail	Respond to of 95453

karen, Welcome out from lurking mode. I think it is very hard to predict where the prices will move. Although many are predicting doom, I think the oil producers agreement will take enough oil out of the system to keep oil prices at levels supporting full utilization drilling for the offshore drillers. If that holds true, we are back to the fundamental value and growth story: there simply aren't very many alternatives where you can be predictably high growth with such low PE's. Here's a snippet from a post on the ENSCO thread: If ESV makes the $0.59 First Call estimate for the quarter (and it has beaten it every quarter for as long as I can remember), it will show 20% cumulative earnings growth. Its trailing earnings will jump from $1.64 to $1.97. Forget for a moment that that is more than most companies in the S&P 500 will see for the year, and consider that, if you buy it anywhere around its current price, you will be holding stock with a trailing PE under 15x trailing earnings. That discounts a lot of potential negatives -- real or imaginary. The strength of drilling companies around earnings announcement time in contrast to generally lackluster results should draw attention. Though we may go down a bit, I think there is likely to be serious buying. The oil producers agreement will be enough boost to keep the party going. When the stocks are moving up around earnings announcements, lots of investors will want to jump in. I think it is a good time to look for the special values to accumulate on any dips and then hang on. That's what I think the big money will be doing. good luck, Baird

To: karen m. blankenship who wrote (17265)	3/31/1998 12:09:00 AM
From: Alias Shrugged	Respond to of 95453

Hello from a fellow Lurker Have been in this sector since 93; haven't posted much since last January. This sector was great in 95 and 96, and results were intoxicating through Oct. of 97. Last six months have not been fun. I held onto all of my land drillers but sold all other holdings in this sector. Last week I added to my positions (bought NE, GLM, PTEN, UTI, MDCO, FGII). I will add quite a bit more if prices drop; for instance, I would buy NE at 27-28, and a whole lot more at 23-24. Then again, there is a small chance that NE may not see 27 again. Today, i bought 10 April 30 NE puts for $.50. A little insurance won't hurt. Although uncertainty surrounding this sector is rampant, I think there has been one significant fundamental change; a bottom has been established for crude. At $13 crude, the pain for certain countries becomes unbearable. Low crude prices create severe economic problems (mostly in terms of governmental budgets) which may eventually lead to social problems. Mexico, Venezula, Iran, and Saudi Arabia have been feeling the pain. What is more likely?: That all the OPECers meet and graciously and generously agree to restrain production, crude pops to $18, and they all live happily everafter? or OPECers meet and play high stakes poker, with lots of bluffin and cheatin and conniving, that some agreement is reached but there is lots of testing and backsliding, with crude bouncing around but mostly dropping. Then, after several more bouts of $15 or $14, or even $13 crude, additional steps are taken to finally tighten the market because the pain is simply unbearable. These countries do NOT wish to commit economic suicide. This process could take several go-rounds and last through the fall. These stocks will do well long term, but I am not fully invested. If these stocks drop, I will fill out my positions. If you are uncomfortable with your position, sell 2/3rds and re-enter if prices drop, or buy some puts. Take care Mike

To: karen m. blankenship who wrote (17265)	3/31/1998 8:17:00 AM
From: JZGalt	Respond to of 95453

Karen wrote: <<LT says check the drillers in a few months...I'd so like to believe, but, at this moment, I'm wishing I had listened to the doomsayers, rather than the optimists.>> Hopefully you saved a little cash (or margin) to deploy when this minor correction occurs. [[BUY the next dip]] If you are fully invested and a long term investor, then turn off the TV and check back in a few months as LT suggested. The only reason to look at this sector now is if you want to trade. Long term investors have for the most part established their positions. Sit back an enjoy the ride (no matter how bumpy) as this sector goes from undervalued to fairly valued. Winter is expected to return next year and gasoline prices are going to be higher this summer. The 10-15% swings you are going to see in the prices of these stocks over the next month or so are not going to seem very large 6 months from now.