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

To: marc chatman who wrote (17327)	3/31/1998 1:59:00 PM
From: marc chatman	Read Replies (1) \| Respond to of 95453

An article on how the majors view the OPEC pact: newsalert.com An excerpt: Amoco Corp. Chief Executive Larry Fuller told the U.S. National Ocean Industries Association on Monday that he expected oil prices to continue to swing violently. "Incidentally, I do not believe that the recent pledges by OPEC and other producing countries guarantee higher prices. A wait-and-see attitude is appropriate," he said.

To: marc chatman who wrote (17327)	3/31/1998 3:03:00 PM
From: Czechsinthemail	Respond to of 95453

marc, I think they are pledging cuts through the end of the year with the idea that eventually the steadily increasing demand will catch up with production levels. Whether that happens by the end of the year or not isn't sure, so I'm sure they will be reviewing the situation as it unfolds. The long-term story is the need to replace reserves. If oil prices are somewhat lower and consumption somewhat higher, there is more need for drilling to replace reserves. The constrain on drilling at this point will continue to be the availability of rigs and perhaps the budget constraints of some of the smaller E&P companies. But as many have pointed out, gas prices have been holding up well -- that is the bread and butter for the shallow Gulf drillers. At this point it is still difficult to line up offshore rigs, so while investors looking at the short term may think drilling will be cut back significantly, so far we just haven't seen a lot of evidence of it actually happening. E&P companies don't have as much leisure as I'm sure they would like around negotiating rig contracts, because the rig they say maybe to today will be gone tomorrow. The OPEC production cuts will result in a more benign price environment than we've had, and I think as the year moves ahead, the incremental demand will firm up oil prices. Baird

To: marc chatman who wrote (17327)	3/31/1998 3:08:00 PM
From: Tulvio Durand	Respond to of 95453

There's no question that OPEC will have to shut off the oil spigot when there are no available empty tankers. And as long as there's oversupply, the limit storage capacity will be reached. The only question is when. Meanwhile spot oil price will swing wildly. It could drop to $5/bl or less when there are no available tankers to load. While fundamentally decoupled from short term oil, drillers' stocks will nevertheless swing in sympathy and provide some very terrific buying opportunities. I think it's prudent to accumulate some buying power and lay in wait for the opportunity that will surely develop over the next few months. Tulvio