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: RGinPG who wrote (20547)	4/27/1998 3:26:00 PM
From: pz	Respond to of 95453

By William Maclean LONDON, April 27 (Reuters) - Asia's economic crisis has triggered short-term uncertainty and downstream consolidation for regional energy markets but steady oil and gas growth beckons further ahead, executives said on Monday. Former Saudi Oil Minister Zaki Yamani said oil demand growth in the region would revive once Asian economies overcame their short-term difficulties, but not at the previousy-high rate which he put at 7.4 percent per year. After the present turbulence subsides, oil demand growth in the so-called Asian tiger economies would settle to 3.6 percent per annum -- "respectable enough for Asia and positively exciting for Western countries," he told an oil conference. "Additional consumption of 0.5 million barrels per day each year from Asia could be a source of great comfort for an organisation like OPEC, which is struggling at the moment," he told the gathering organised by the Centre for Global Energy Studies. He said 42 percent of the Middle East's incremental oil exports between 1996 and 2010 will be heading for 10 Asian "tiger" economies. On the outlook for refined products, industry cooperation in Asia was seen increasing as competition hots up in the face of a slowdow in regional demand because of the financial crisis. "In the short term there remains considerable uncertainty. The timing of gas developments in particular is clouded," said Paul Griggs, vice president of strategic planning for Broken Hill Proprietary Co Ltd (BHP) . "Over the longer term, growth in Asia will be significant. In particular growth rates for gas developments will be likely be higher than for other fuel supply sources." David Moore of Andersen Consulting told Reuters a contraction in Asia's downstream industry could gather pace. He predicted: -- Major consolidation in Japan, already undergoing a shakeout -- Consolidation of South Korean refineries that are to be sold off as a result of financial crisis -- Probably some consolidation in Thailand because of surplus capacity there -- Possible, but not necessarily likely, privatiation of Indonesian state oil company Pertamina as a result of the country's substantial economic problems "which would open up an array of opportunities." Experts in the region have forecast Asian demand growth in 1998 for oil products at around 300,000 barrels per day (bpd), rather than nearer the 800,000 bpd that had been expected before the region's worst finacial crisis in decades struck last July. Analysts said free market reforms planned as part of attempts to rescue the region from its economic slowdown would make economies better managed and more transparent and improve opportunities for international energy investment. "There are some short-term obstacles to be sure. The Asian flu will not immediaely disappear, and a lot of hard work will be required to restructure the region's economy," said Atlantic Richfield Co chairman Mike Bowlin. "However there are solid grounds for optimism, given the signs of renewed strengh in Thailand and Korea. In Indonesia the Suharto government has indicated a readiness to tackle serious reform." Booming demand for gas driven by environmental reforms was good news for countries with substantial gas reserves like Indonesia, Australia and Malaysia. But Caltex chairman David Law-Smith said companies would have to tackle refinery overcapacity and what he called over-investment downstream. He said the current petroleum oversupply in the region woul persist "for some time" while the region's downstream industry went through an unprecedented wave of rationalisation, amalgamation and joint use of resources. "While companies are eager to share refining and distribution facilities, we have not yet seen many closures of excess and inefficient capacity," he said. "The financial burden of plant closures is enormous and refiners commonly prefer to to limp into the future than absorb this impact. Mark Moody-Stuart, a group managing director of Royal Dutch/Shell Group , said reduced Asian demand had aggravated oversupply in production and refining capacity. He said oil demand growth in the Asia/Pacific region could slow even less than the 2.5 percent seen in 1997. He said the slowdown had left more spare refining capacity in Asia than in western markets -- a development that would have been "unthinkable only a few years ago." The result was net oil product flows from east to west rather than the historic pattern in the other direction -- evidence of the maturing of the Asian oil products industry.

To: RGinPG who wrote (20547)	4/27/1998 3:32:00 PM
From: 007	Respond to of 95453

I agree and I guess that's why UTI is my largest position (followed by TCMS and TMAR). By all accounts the domestic gas business is very strong and likely to get stronger. UTI has an aggressive growth strategy through acquisitions, yet long-term debt is still low. Technically, it has a very nice rounded bottom and it doesn't appear as though it will revisit its lows. In fact, it seems fairly likely that it will make a rapid move higher once it gets through 20. Earnings will be out later this week, so anything is possible (good or bad). On a valuation basis PKD seems equally attractive, but I don't know anything specific about their business. 007