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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 (22870)	5/27/1998 10:24:00 AM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

E & P Analysis and forecasts ...not as bad as thought ! E & P companies seem to be in better shape than most think; if they continue to post solid earnings and rethink potential cuts in exploration and production, this should bode well for the service and driller stocks near term. While the market may over-sell the oilpatch short term; it appears that we may not see the E & P cuts and the corresponding dramatic drops in prices of drilling contracts upon renewal; further endorsing positive expectations for continued positive earnings for drillers and service stocks in Quarters 2,3,&4. ...from DLJ Oil Analysts: "As exploration and production company stocks take a breather-along with other energy and many industrial sectors-we see little that is fundamentally new, yet there are renewed questions regarding the near-term path for both oil and natural gas prices. Although independent production company shares began to show some life and outperformed early in the first quarter in the face of a crude market meltdown and balmy winter weather which confirmed abysmal first quarter comparisons, we have noted more discussion relative to energy pricing. We remain resolute in our belief that both oil and natural gas realizations passed the trough for the year-and probably longer-in the first quarter, yet concede that the picture may remain fuzzy for some observers over the next several weeks. The crosscurrents in commodity markets prompted some head-scratching on both sides of the Street, as evidenced by some gyrations on the parts of a few of our esteemed competitors and more selectivity within the group for many investors. In the oilpatch, more than a few operators have begun to rethink spending plans for the year, some to embark upon far-reaching repositioning programs, and others to accelerate common share repurchase programs and evaluation of consolidation opportunities. Uneven share prices over the past few weeks have indicated that while few are projecting anything less than a bright outlook for independent production companies, the rebound seen in the first quarter has led some to remain on the sidelines until the near-term picture clears. We believe the risk in exploration and production company stocks of dead money in the next few weeks to be more than offset by the opportunity to return to solid stories with cheap price tags. As we are resolute that little has changed in the compelling fundamental and investment prospects for the group, we underscore our selective stance, focusing on familiar stories with some new looks. Taken collectively, we see a number of developments serving as catalysts for returning attention to some sterling opportunities in the upstream. The fact that the group is in fine shape-as seen by solid first quarter numbers in the face of paltry energy prices and reserve replacement/finding costs besting expectations in a less hospitable oil service environment-and poised for another wave of consolidation, along with rebounding oil markets and natural gas prices being strong when they shouldn't, will garner renewed attention sooner rather than later."