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

To: pt who wrote (28615)	8/31/1998 2:55:00 AM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

(pt;...HOFF cash)... & ''They can't have it both ways !'' You are correct; Thanks for the correction - I had $134 Million listed as a misprint from another source - ''was too good to be true''...couldn't understand how they weren't a hostile takeover candidate...all ready taken out. I would have thought Paulo had arranged financing by now ..<VBG>. Concerning companies with strong cash positions & being able to ride out the storm (per the earlier posts) DO & ESV or even SLB with $384 million, $350 Million & $1.78 Billion seem to be in a league of their own. ESV with $351.3 Million in cash vs. a market cap of $1.56 Billion and having low debt - seems to be the single most financially sound company. Wonder if SLB & DO will put their cash towards buying cheap assets or keep it to weather any & all storms ? SLB has been rumored to be eyeing PGO (keyword - rumored...) .... some of the highly leveraged companies like FLC or KEG are very, very interesting bets here. FLC does have alot of cash, but a high debt level and KEG is buying like pac man - very high debt & no stopping in sight. If we get a quick rebound - these two will fly. If not ... Big Dog & the post from the guy who had SLB's VP @ brunch, paint a pretty rough picture; however I feel that this and worse... is allready priced into these stocks. Excellent niche players SCSWF & FGII now at PE of 5 times newly revised & lowered '99 EPS. While big Dog's info on the Norwegian problems has to be taken seriously; don't forget we've seen losses that mirror those in Norway allready. last 5 days: IO -32% VTS -32% NOI -28% SCSWF - 28% CXIPY - 17% last month : NOI - 58% FGII -50% SCSWF - 40% CXIPY -38% FLC - 35% EVI - 32% RIG - 30% 3 months: NOI - 72% FGII - 65% EVI - 65% FLC -63% VTS -62% RON -55% RIG -45% these are just a few... I can not think of a strong sector correction in recent times; where the companies were still this profitable - some still showing very substantial year over year & quarter over quarter EPS gains. Also; these types of selloffs are traditionally accompanied by huge losses, restructuring charges, single digit EPS growth or actually substantial EPS losses and they do not have the balance sheet strength of many of our companies - our debt/equity ratios, ROE, ROA & Profit Margin %'s are exemplary compared to traditional #'s of companies or sectors suffering this type of a selloff decimation. This alone builds a historically suppported value buying case - even when subjected to cyclical sector historic #'s. If the emotion is taken out & the numbers are studied - a much stronger case is made to buy, than to sell. In my opinion; this represents a classic oversold opportunity. Did we deserve to be hit ? - sure, just not to this extent in these fine companies.Also; at $13-$15 Oil; we will see activity virtually remain where it is now ( as long as crude hovers above $13 & remains stable) --- E&P companies/Major Oils have to replenish reserves; there will be drilling and the resulting need for service & equipment manufacturing, sales & repair. One factor not even talked about is that if the market doomsayers are correct; prolonged low crude prices - are virtually self correcting; as ultimately they reach a level where the cutbacks in E&P by the Major Oils (not to mention OPEC/Ridayh reactions or the ultimate rebound in Asian demand) will reduce supply to an extent that prices will rise...if the Major Oils don't reduce E&P - then we have no reason for the driller & service stocks to go substantially lower from here...certainly from a historic perspective - especially in light of present profitability; we have had more than an adequate selloff. ''They'' can't have it both ways ! - this is the premise for my entire philosophy of buying here. Which is it ? - if crude prices stay low - won't the major Oils stop/dramatically lower production - which will lower supply - hence, self correcting supply/demand and raising prices to where a recovery occurs ? Or, if the E&P companies/Major Oils do not reduce production - then why should the driller & service stocks go substantially lower ? Also; while OPEC and other minor CRUDE producers could just dump crude on the market as fast as they can pump it; to raise revenue they badly need in light of lower crude prices. The ''world'' will not permit it. We have political/military/economic stability seriously in jepordy if crude goes lower or does not rebound soon. Don't think for a minute that OPEC or even Venezeula will shoot themselves in the foot - destroy their longterm prosperity for a short term fix; the pressure from the Worlds powers will not permit it. A Global Crude Oil summit is not far off... Also; don't think for a minute that the downplayed, and publically cancelled meeting between Saudi, Venezeula, Mexico & others isn't perhaps taking place in reality -without the public/press pressure... some arm twisting is going on currently - OPEC is acting like a child; hoping that someone else will cure the problem or - ''that it will just go away''... However; they will be at a crisis point in 3 months - this will not continue; they will ultimately do what they all along, knew they had to do; they were understandably - just postponing the inevitible...