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

To: upanddown who wrote (31576)	11/7/1998 1:53:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

GLM Rose's comments on Reserves are ominous... <<For example, the R-P ratio, which is the reserve-to-production ratio for gas in the Gulf of Mexico, has fallen from 11 years to 6 years, so rather than having available 11 years' worth of reserves offshore to supply natural gas, we only have 6 years. Now if that falls to one year -- 12 months -- we're going to have a serious problem. And it will continue to fall as long as oil prices remain low, and companies aren't out there drilling and finding other reserves because once you start producing a field -- from the very first day you start producing it -- the ability of that field to produce declines, so you have a declining reserve base, declining production level going on with all existing fields, which means you have to continually drill in order to replace those declines and keep your production high. >> ...sooner or later; the ''Rubber Band'' effect will come into play. I think that the weaker dollar, coming Asian demand increases (which I think will be sooner & larger than expected) along with a normal winter (let alone a La Nina Winter) will move crude substantially. If OPEC maintains cuts, this alone can bring supply/demand imbalances inline. No one seems to be factoring in the dramatic decline in US E&P activity. Sooner or later these two trendlines are going to reverse. A rising production line is going to fall simultaneous to a falling demand line that is going to rise; when these two reverse - we will have a dramatic spike in crude oil prices. Those that are buying here will be positioned in 12-24 months for what I can see as potentially the most profitable era in the history of the Oil business. Todays consolidations, cost cutting and technological advances will greatly add to future profitability in good times. We may indeed have a brief economic downturn in the near 6-9 or even 12 months, but when the Asian Phoenix rises, and Brazil - South & Central America and Russia / Eastern Europe recover from an actual economic abyss - with their phenomenal minimum 10 year massive demand for Industrial Expansion; let alone the emerging nations & Africa... we will have a tremendous pent up demand for Industrial & Economic Expansion Worldwide. No one is talking about what the new EU will do for industrial expansion in Europe. The Liquidity pump worldwide presently occurring, will unquestionably lead to an inflationary effect and rising commodity prices - where Crude Oil will strongly benefit. The Industrial demand from the Worldwide demand slack alone, will be substantial. Factor in the huge influx of money pumped by the Worlds Financial System and Crude Oil will be a prime benefactor of this allmost historic event. To not be positioned to take advantage of this; is to miss a historic Economic Expansion imho. The World is much, much closer to a coordinated massive Industrial & Technological Expansion than it is to an Economic Crash... The events that are taking place with the forming of the EU, the unprecendented Worldwide "Coordination'' of Economic Policy and aid; are ominous... "New World Order'' will take on a whole new meaning very shortly. The recent events in Worldwide Economics are historic. With the USA leading the Financial Management of this emerging Coordinated Worldwide Economy and the Worlds Financial Markets; it is not hard to envision an Economic boom of unprecendented proportions. The greatest technical ''spikes'' in demand occur excactly after the ''bottoms''; from which we are just now emerging from in Japan, Korea - overall Asia, Russia, Brazil etc... Internationally; we are in a period not unlike that following the emergence from World War II; only now we have Worlwide casualities from an ''economic'' war...not a physical or militaristic one... For the World to be allmost simultaneously emerging from a historically low Industrial demand trough ; will lead to an unprecedented surge in demand. To say that this will be inflationary will be one of the great understatements of all time... Asia and the 3rd World will relatively soon have their demand surge, due to not only the massive liquidity pump driven by the coordinated efforts of the International Financial Community (Rate Cuts, IMF funds etc.), but also by there emergence into the Industrial & Technology age. Who can not envision the potential of a Russia and Eastern Europe; let alone 2 Billion Chinese riding bicycles; where the Automobile (crude eating machine) has not even scratched the surface of ''ownership and use models'' by Industry Analysts. The Infastructure needs of Heavy Industry, Power & Manufacturing Plants, Road & Bridge Construction etc. will drive massive demands for crude Oil. Many articles and models state that demand models greatly underestimate the potential surge in demand for Crude Oil in a 2-10 year period and vastly underestimate the negative effects of aging Oil fields and declining production curves. A very real possibility for a rubber-band snap in a reversal of supply & demand economics exists. When we have prolonged periods of $12 Oil; it virtually guarantees a prolonged period of greater than $18-20 Oil. The massive moves of savvy Big Money into some Independant E&P companies, is in anticipation of the historic repeat of simple supply & demand snap backs...not overnight, but the trend will be powerfull and will not be short in duration. It is a myth, that the faucets can be turned on, or up, on a moments notice; far, far from the reality. Time will tell; but we have some historic events that one can either be in on, at the ground floor,( yes, we may be in the basement presently) or wait to catch the elevator on the way up; which by the way; gets costlier floor by floor... We have some calling for a 1929-esque Worldwide Economic collapse. Actually; I think there was the obvious potential for an unprecendented crisis; however, the greatest opportunities exist when we manage our way out of these crisis.The incredible story here, is that this International Financial/Economic crisis; gave us an opportunity; and gave Greenspan & Rubin a worldwide Stage in which to test and prove - that the International Coordination of Financial & Econmic Policy not only works; but it is a necessity in todays world; and that the USA is at the controls of this ship... For Japan to overhaul its Banking System is a historic event of greater Cultural proportions than an Economic one. This event will be a major point on a historic timeline in Asia... We are seeing Korea do amazing things. Brazil emerging from a crisis to evolve and rise to an Economic major player. Companies like Telebras and the emerging Industrial Companies of South America are exciting. The opening up of Russia and Eastern Europe to Freedom, Capitalism and the Industrial /Technological revolution along with the simultaneous formation of the European Union hold unprecedented opportunity. It amazes me that we have such darkness, such capitulation, such negativity; right at the birth of perhaps the greatest worldwide Industrial Expansion since WW II... The events that have unfolded in mere weeks of late; are unprecendented. The tide has so dramatically shifted expectationwise in mere days and weeks; that I think we are seeing Economic History unfold on a Worldwide basis. Big words I know, but this is history. To manage our way out of this International Crisis; is a Watershed event. A ''New Era'' has emerged; the world's Financial systems and Economies will NEVER be the same... Those that beat the crowd to this Party; will be richly rewarded indeed. It may be a little early and the road may be a little bumpy for a while yet; but the ride will be more than worth it imho...