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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Greg Spendjian who wrote (5769)	12/22/1998 8:37:00 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 24898

Greg - David Peever / Forecasted oil prices It was about 1-1/2 years ago that there was a symposium held for the oil industry and some advisory firm spoke on oil prices falling to $10.00 in the near future. The price of oil at the time was over $20.00. I shrugged it off as someone too extreme to pay any attention too. My scorecard now has at least two negatives. The first was the coming effects of El Nino - another one I shrugged off before the event occurred which I described as a forecast from the hippy-dippy weatherman, and now the $10.00 oil price which I thought was not possible. David, I think you may remember the oil forecast as I mentioned above. By any chance, do you remember the source? It's amazing how events and happenings bring you back to ground zero. However, we haven't quite arived at that level in relation to share prices of the oil and gas companies. BUT WE ARE DARN CLOSE. The name of this financial game is to buy low and sell high. The industry is far and away one of the worst performing sectors in the market. Oil is at a 12-year low - 25 years low if you factor inflation. The simplistic view is this, what goes down must come up --- eventually. Not withstanding any real deep general market correction, I think the oil and gas stocks are now presenting above average returns over the next 1-1/4 to 2-1/2 years with a minimum of downside risk. However, I continue to caution that one must be selective with focus on balance sheets, especially long term debt. A company must be able to service its debt and yet, continue to grow production and reserves. Add this growth + an increase in oil prices to the extent of 50% plus, you're going to be holding stocks a couple years down the road worth a lot more than the share prices you see now.

To: Greg Spendjian who wrote (5769)	12/22/1998 8:56:00 PM
From: mark calgary	Read Replies (1) \| Respond to of 24898

I don't see much in the way of incentive for producer cutbacks. In the developing producing countries ( Mexico and Venezuela ) cutting back is just not in the cards fiscally. They need all the foreign currency that they can get their hands on in order to keep their own currencies afloat. The Saudis have taken the attitude that "We told you to cut back and you haven't - now watch it flow - we will blow you out and teach you a lesson. IMHO that is what is causing the glut of oil. What will it take for us to get through the oversupply? Asia will need to get restarted and while we are waiting the search for new supplies is tailing off drastically. Unfortunately we have found much better ways of finding oil and finding it at lower costs. Domestically ( Canada and the US ) we aren't cutting back on production at all. The smaller companies that were the growth enzyme after the last market tumble ( early 90's ) have now grown to intermediate size and are scrambling to cover costs and debt while the price is down so low. The more careless of these companies are dying on the vine and either have been or will be soon swallowed by those who saved some pennies for the rainy day ( take Blue Range and Remington for example ). What I find interesting is that some of the Income trusts have had their share prices attacked just as regular producers have, but that the $ yield has not changed all that much. The "dividend" percentages are very attractive right now because of this, and from a long term perspective these trusts look just terrific. It will be very interesting to see what kind of reserve right-downs are still to come from the oil companies. I think that there could be some staggering adjustments to reserves based on the accounting principle that says if its not worth getting out of the ground at todays price you can't book the reserve ( major impact on NAV ). Anyhow - just some thoughts Merry Christmas - glad to be of help