To: Knighty Tin who wrote (29701 ) 7/12/1998 2:35:00 PM From: Merritt Read Replies (1) | Respond to
Mike, the '70's wasn't a run-up, it was an explosion...but when you look at a stock like CDG, that went from under $8 in April of '96, to over $80 in Nov of '97, I think it's fair to say there was a run-up. CDG may have been an exceptional performer, but triples were the rule during the period. The sector didn't move because of Mid East tensions, but because of the perception of coming oil shortages caused by increased demands from the surging Asian economies, IMHO...or do you think it was just a coincidence that the Nov '97 peak occurred as money managers finally became aware of the widening effects of Bahtulism? So, barring a meaningful stiffening of OPEC's policies or an increase in control of market share by fundamentalist Arab states, I doubt that there'll be any sustainable move over $20/bbl for oil until the Asian economies show solid signs of turning around. I don't, with the exception of two E&P cos., have any money in the sector, but I guess if somebody really wanted to do some bottom fishing, your rec of TDW is OK - maybe their stock buy-back program will lend it some support, and as you say, it does pay a dividend. GLM may be an institutional favorite, and maybe it will soar (I wish I had a crystal ball that worked), but my feeling is that they're concentrated in an area of drilling that doesn't have any pricing leverage, day-rates are declining, which means lower revenues, which indicates lower stock price, and it doesn't pay a dividend...so it doesn't appeal to me. Those two may be trading 50% off their highs, but they're also trading at double (TDW) and quadruple (GLM) their 1995 lows. As far as zero huge discoveries...I guess it all depends on perspective. The North Sea finds, RD's Mars field in deep water GOM, the 'elephant fields' discovered off shore S.E.Asia don't look like puddles to me. New technologies are opening new areas for exploration, so to say new ones don't exist when they haven't yet been looked for...
