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

To: Amelia Carhartt who wrote (28169)	8/22/1998 7:51:00 PM
From: Captain James T. Kirk	Respond to of 95453

Oil producer trio to meet Aug 28 - Arrieta CARACAS, Aug 21 (Reuters) - The three oil producing countries who orchestrated a series of output cuts earlier this year will meet somewhere in Latin America on August 28, Venezuela's Energy and Mines Minister Erwin Arrieta said Friday. ''The meeting with the Mexican and Saudi Arabian energy ministers will be next Friday,'' Arrieta told Reuters. He added that the meeting would take place ''somewhere in this continent.'' The three producers were the driving force behind a series of pacts which included members of the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC members to withdraw about 3.5 million barrels per day (bpd) from world oil production in a bid to boost flagging prices. But both Arrieta and Mexican Energy Minister Luis Tellez have been emphatic that further output cuts will not be discussed at next week's meeting. However, industry analysts perceive this as a move to downplay expectations to maximize market reaction to any further output cut.

To: Amelia Carhartt who wrote (28169)	8/22/1998 7:53:00 PM
From: Captain James T. Kirk	Respond to of 95453

Venezuela planning minister confuses on oil plans NEW YORK, Aug 21 (Reuters) - Teodoro Petkoff, Venezuela's Planning Minister, appeared to contradict himself Thursday when making comments about the oil market, confusing oil traders and sending oil prices lower. Oil traders in New York said that oil prices were lower on Friday, despite heightened Middle East tensions, largely because of a report on Thursday evening that Petkoff said his country was mulling rescinding some or all of the production cuts it was instrumental in spearheading earlier this year. However, his comments were actually contradictory and, on balance, appeared to support the status quo. When asked by reporters on Thursday if Venezuela might increase the amount of output cuts he said: ''The government is studying that together with PDVSA.'' And when asked if Venezuela could reduce the amount it was cutting he said: ''We're studying the possibility.'' But Petkoff later answered emphatically when asked if the government was committed to the 525,000 bpd cuts: ''Yes, the agreed cuts are already in effect.'' The oil market is also uncertain about the intention of a meeting next week between the three oil minsters from countries which have led two rounds of cuts this year -- Venezuela, Saudi Arabia and Mexico. Venezuela's oil minister Erwin Arrieta said on Friday that the meeting would be on August 28 somewhere in Latin America. But Arrieta and his Mexican counterpart, Luis Tellez, have said the talks will not be about further cuts and will concentrate on a market assessment. So far this year, OPEC and non-OPEC producers have pledged to cut a total of 3.1 million barrels per day from a glutted world oil market. But not all those pledges were honored and oil prices have remained weak, leading to the threat this week of currency devaluation in Venezuela. Oil market analysts have speculated that the ministers are trying to downplay any expectations from next week's meeting so that any failure to agree further action will not lead to even lower oil prices. --------------------------------------------------------------------------------

To: Amelia Carhartt who wrote (28169)	8/22/1998 8:01:00 PM
From: Elmer	Read Replies (2) \| Respond to of 95453

MSB, explain the rationale of your recommendation of selling all oil service stocks. Or is it just another one of them random guesses that a lot of people seem to be making. While these guesses have seemed to work in the last few months, there is no rational reason for these guesses to continue working. Salomon Smith Barney, Paine Webber and Merrill Lynch all came out this week and lowered estimates to their worst case scenarios for 1999. End result is some companies still offer more growth potential at lower valuations than the overall market with significant upside in earnings estimates if for some reason oil gets back above $17 by mid 1999. For example: Noble Drilling: Paine Webber 98EPS Est. 1.49 Paine Webber 99EPS Est. 1.90 Growth = 27.5% 99 P/E = 8.0x Salomon Smith Barney 98EPS Est. 1.53 Salomon Smith Barney 99EPS Est. 2.25 Growth = 47.1% 99 P/E = 6.7x Merrill Lynch 98EPS Est. 1.50 Merrill Lynch 99EPS Est. 1.90 Growth = 26.7% P/E = 8.0x Above 20% growth estimated by each one on worst case type of scenarios and under 10x P/E. In my book, this is a favorable risk/reward tradeoff. Many people are forgetting that a lot of these companies have some nice LT contracts on deepwater rigs coming on line over the next two years that provide good EPS growth even with jackup dayrates at or near B/E levels. FLC and RIG also provide 20% type of EPS growth with below 10x P/E's. To lump companies like this in with ESV and GLM is just not an accurate leap. While I do believe GLM and ESV (both trading below NAV) offer huge upside if oil prices do recover faster than the "experts" seem to think, companies like FLC, NE, and RIG offer good growth even of the current situation persists into 1999. And if the conditions actually improve, watch out!! as these stocks could double by year end. Investor uncertainty and fear present awesome opportunities for those willing to look at the facts and position themselves accordingly. Good Luck to All, Elmer