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

To: TRINDY who wrote (32333)	12/2/1998 12:15:00 AM
From: Rob Shilling	Respond to of 95453

Pardon my ramblings here: The Exxon-Mobil merger announcement happened on the day that oil prices hit a 12 year low, a coincidence ?? I think not. The ONLY way this merger will ever fly is if most people believe oil prices will stay low for years. Surprise, that is the spin of recent months !! Big oil is putting one over on the world !!! Reunite Standard Oil??? Is the U.S. really going to fall for that ???? The fact is that the big U.S. oil companies are scrambling to survive the fact that most big, low-cost oil is not under their control (IMHO)!! Huge Exxon has been unable to increase its oil reserves. But Mobil has better deals in regions like the Caspian and Saudia Arabia. Also, by combining they will have more of a lock on refining and retailing of gasoline (which they will have to continue to focus on, because they do not have the oil reserves to compete with Saudia Arabia or Russia). My opinion is that in a way the rules of oil have changed. It used to be worldwide excess supply capacity was 15 mbpd with demand at 57 mbpd. Now excess capacity is 4 mbpd with demand at 75 mbpd. Yet we have extremely low oil prices NOW!!!! I think wall street is seeing that we are very close to a true supply/demand equilibrium. Now we are just waiting for the gap to close. The gap will indeed close fast IMHO. Why ?? hardly anybody is making money at $11 oil. What is NOT being reported .... How much marginal production has been shut in, thats what. That is the real story. I am sure the shut in production is already huge. The reason we don't see it is that there are no numbers that can be trusted for world-wide storage. Taking into account the recent OPEC reductions, there is at least a 2.5 mbpd drawdown. If you add in marginal producer cuts, it could be much higher. But when is the last time anybody has seen a report like the API report for the worldwide storage numbers??? Since we will not get accurate numbers, the market will continue to say "there is a lot of oil out there". So, we have to wait for a true shortage (not a manipulated one) before oil prices bounce. But when they bounce it will be high !!! Drillers will probably do well for years after this point in history. Remember its the oil reserves that win. OPEC, Russia, Venezuela have the reserves. The U.S. is not part of this group. Contrary to most reporting, OPEC is not losing by being unable to raise oil prices, it is WINNING !!!!! Low cost producers have the advantage, not high cost spin experts !!!

To: TRINDY who wrote (32333)	12/2/1998 1:33:00 AM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 95453

Trindy, Mobil and Exxon will "meet halfway" on staffing issues. Indeed Exxon's International Oil Group will be moved from New Jersey to Houston, Texas. Also Exxon's Refining HQ in Syracuse New York will be shut down and moved to Mobil's HQ in Fairfax,Va. So both companies' employees will be somewhat affected by relocation. Total; job cuts will be 9,000 jobs out of 122,700 total workforce or about 7.3%- not too bad.. And yes you are correct- Saudi Arabia is playing hardball with other producers- aimed mainly at recalcitrant OPEC members, higher cost North Sea producers who never make production cutbacks, and at Venezuela and Mexico too..... And as to predictions that oil prices will stay low for years- don't count on it! Back in 1983 everyone was saying that oil prices would go up every year right into the millenia, ha, ha! Now everyone is saying that oil prices will be flat forever into the future. Just more of the same predictive overeaction that we saw in 1982-83, but this time on the downside.... But I do agree with you. Play the tech stocks for the time being since they lead the market both on the up and down side. ... Sincerely, Doug F.

To: TRINDY who wrote (32333)	12/2/1998 10:02:00 AM
From: diana g	Read Replies (3) \| Respond to of 95453

Re: Hope From Venezuelan Election ?? <<<"Please give me reason to believe in the OSX sector.">>>> I think that the inability of OPEC to reach agreement to take action at the Vienna meeting may be largely attributed to Venezuela's political situation. With the election there upcoming (in a few days now), Venezuela's reps could not agree to anything in Vienna. Once the political future is determined, the new Venezuelan govt will be able to make agreements and take action. I sure don't know what will happen, but movement toward agreement will be more possible. I ask myself: "Is it in the long term interest of the low-cost producers to flood the market and reduce their reserves?" I think not. They want to have higher prices and will try to work something out. Maybe they will fail, but the situation is far from hopeless, imho. Also, I am encouraged by all the bad news and predictions of low oil price continuing for many years. Is this 'Blood in the Street' or What??? regards, diana