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: bw who wrote (17930)	4/3/1998 2:58:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 95453

bw, I'm familiar with that, and it's irrelevant to my argument. Remember, I am arguing against a position based on emotion, not careful analysis. Why would this analyst think that earnings would peak in 1999 even if OPEC couldn't hold the line on the spot price of oil? That would imply a strong connection between the spot price of oil and the supply/demand ratio for rigs. Long term, everyone agreed that the price of oil had to increase substantially from its recent lows. Yet this analyst was drawing a conclusion from short-term prices. But no exploration company would scuttle a project on the basis of a short-term glut in oil. They would shelve such projects only if the long term outlook remained bleak, or if they ran out of cash. Luigs and many others have pointed out that the best environment for the drillers is one in which there is sufficient profit per bbl for the majors to continue funding exploration, but not so much to result in significant drops in production rates (which would decrease the need to find new reserves). Regards, Paul