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

To: Crimson Ghost who wrote (31996)	11/21/1998 12:17:00 PM
From: gmccon	Respond to of 95453

cnn.com Baghdad falters at first hurdle. "... the agreement may be shortlived with Iraq Friday calling a U.N. request for documents about its banned weapons program "provocative rather than professional." Iraq laid out conditions for arms inspectors to see one of the more contentious documents." ********************************************************************** Don'tcha just love these guys? On the one hand they promise "complete and unfettered access". On the other hand, "here are the conditions for you to see this document". To the B-1 pilots: "Gentlemen, start your engines."

To: Crimson Ghost who wrote (31996)	11/21/1998 5:47:00 PM
From: Thomas M.	Read Replies (1) \| Respond to of 95453

forbes.com With deflation in the air, oil shares are cheap. Too cheap, says the manager at MainStay Value Fund. How low can energy go? By Thomas Easton VALUE FUNDS, the ones that buy stocks trading at low multiples of earnings, dividends or book value, are supposed to hold up better than growth funds in a bear market. In the recent correction, though, value managers haven't exactly covered themselves with glory. The MainStay Value Fund, for example, kept up with the hard-to-beat S&P 500's heady 17% annualized return throughout the 1990s before hitting a wall early this year. Thanks to an overweighting on commodity producers and an underweighting on health care and tech companies, it has since run 20 points behind the index. Don't abandon value now, pleads Denis Laplaige, the 47-year-old manager of this $1.3 billion fund and president of the institutional investment firm MacKay Shields. And don't abandon oil. Laplaige's fund has built a 15% position in energy stocks, double the normal weighting. At a recent $15 a barrel, oil is down by a third from a year ago. Laplaige expects a recovery to $20 over the next two to three years. The reasons for the recent decline are obvious: Last winter was unusually warm; demand collapsed in Russia and Asia; and the prospect of high prices—a year ago the experts were predicting increases in the price of oil—prompted increased drilling at just the wrong time. Falling prices, though, have had an impact of their own. Laplaige doesn't expect a surge in demand. He does, however, believe in the possibility of shrinking supplies. Inventories should typically be building at this time of year, and they are not. Russian production has been crippled by the country's economic chaos. The count of drilling rigs in the U.S. is way down. Given the positive impact that higher oil prices would have on some of the most precarious areas of the world (namely, Latin America, Indonesia and Russia), it is likely that wealthy nations won't even protest a price increase. The price surge would have a positive impact in the valuation of the integrated oil giants, but the biggest beneficiaries would be specialized U.S. oil and gas exploration companies. Laplaige argues that a number of smaller oil explorers are trading well below their probable breakup value. "The companies sell at a 20%-to-50% discount to the value of reserves, never mind the exploration prospects," says Laplaige. At times, he adds, it is cheaper to drill for oil on Wall Street than in oilfields, and today is one of those times. But the disparity never lasts very long. The table shows six explorers (Oryx Energy, Union Pacific Resources, Seagull Energy, Santa Fe Energy Resources, Apache, Noble Affiliates) that Laplaige rates a buy. The "liquidating value" is an estimate from John S. Herold, Inc., an energy-analysis firm in Stamford, Conn., of what a company would be worth if it sold off its reserves, paid off its debts and distributed the net proceeds to shareholders. The Herold figures assume a conservative discount factor on the present value of oil and gas that will come out of the ground years hence; they do not, however, allow for corporate taxes that would be due in such a liquidation.