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

To: Bilberry who wrote (32780)	12/12/1998 1:32:00 PM
From: Platter	Read Replies (2) \| Respond to of 95453

The pain will drive drastic action at OPEC!..Mark my words!!!! Check this article......... "12/12/98 Libyan Oil Minister Calls for 'Drastic Cuts,' Wants Earlier OPEC Meeting Libyan Oil Minister Supports Early OPEC Meeting, 'Drastic Cuts' Cairo, Dec. 12 (Bloomberg) -- Libya's oil minister said ''drastic'' production cuts are needed to lift oil prices and called for an emergency gathering of the Organization of Petroleum Exporting Countries before its next scheduled meeting in March. Abdalla Salem El-Badri ''advised'' that OPEC should hold an early meeting. ''We are going to work on OPEC members that they should do something,'' El-Badri said. ''Maybe they should have a drastic cut to get rid of the inventory. There is no other choice.'' OPEC, in a meeting last month, failed to deepen existing output cuts to ease an oil glut and boost prices which is close to a 12-year low. The 11-member organization, which controls about 40 percent of the world's oil supply, is embroiled in a dispute over which members should bear the brunt of any further cuts. January Brent crude rose 18 cents to $9.82 on the International Petroleum Exchange yesterday, after touching a record low $9.60 Thursday. Crude oil for January delivery was little changed at $10.79 on the New York Mercantile Exchange after slumping to $10.66, the lowest price sine July 1986. El-Badri's comments support those of Kuwaiti Oil Minister Sheikh Saud Nasser Al-Sabah who last week called for an emergency gathering of world oil ministers to discuss production cuts before OPEC's next scheduled meeting. OPEC members should reduce their combined oil output by a minimum of 1.5 million barrels a day, Al-Sabah said. ''We have to do something. OPEC must do something,'' Badri said at a regular meeting of the Organization of Arab Petroleum Exporting Countries in Cairo. Libya is a member of OPEC.

To: Bilberry who wrote (32780)	12/12/1998 1:40:00 PM
From: Mike from La.	Read Replies (1) \| Respond to of 95453

Since folks are asking opinions of how to handle the present level of oil prices, I thought I'd throw in my best guesses. I've stuck strictly to deepwater companies, not just drillers, but others such as PGO, and CXIPY. It looks like a major game of chicken is going on between Saudi Arabia, and the quota cheaters. If so Saudi will win, simply because it is the lowest cost producer in the world. But the major oil companies are not giving up. They are consolidating and taking measures to reduce their costs. We may be moving into a period of very low prices and very low profit margins, and at the same time producers need to maintain production in order to offset declining field production, and to avoid losing market share. To do this the majors have to go after the lowest cost oil. That would lead them to just one area, deep water production. The costs are dropping, due to tech advances, and the potential is large enough that the volume of oil produced works out to a cheap cost per barrel, in spite of the large start up cost. The saudi's actions are resultng in long term low cost production competition. So, I think over the next year, or longer, we will see most of the spending going into deep water, at the expense of shallow water, and land drilling. The majors are preparing themselves to survive in a low cost environment, the larger independents are following suit, the small independents, who can't afford the costs of deep water drilling, are going bankrupt. It's possible that OPEC may get it together, but no one is banking on it. One article I read said that the Saudi's are discounting their products in the US, as a direct attack against Venezuela's actions, which makes sense, but shows how the gloves are coming off. I think that what started as just a miscalculation has grown into an all out war. But the majors are preparing to survive, by concentrating on preserving production by their deep water activities. So, that is where I plan to sit out this situation. In a year, maybe two, those left standing will use their positions to push up prices again, and there will be again an increase in overall drilling, and it will be time to move into other stocks. The rubber band effect will kick in at some point, and those with early positions will do well. I'm encouraged by the fact that most of the OS stocks are trading sideways, in spite of what appears to be the worst situation in over a decade, but I think earnings will be safest in the type of companies I mentioned. Mike from La.