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

To: davedb who wrote (34605)	1/10/1999 10:25:00 PM
From: Robert S.	Read Replies (1) \| Respond to of 95453

Dave, depends upon your investment time horizon and the degree of risk you are willing to tolerate. If you hold FLC for 2 to 3 years, I believe you will be abundantly rewarded. Any initial or additive long-term purchase in this sector is predicated on the belief that oil prices will rise and stay there. If you have doubts about this scenario unfolding, then companies with strong balance sheets (e.g., DO) would be a better bet as they'll be better able to weather the storm. But if you believe, as I do, that oil prices will self-correct, then the risk/reward basis for FLC is extremely favorable. I have RIG, SLB, FGI, and VRC in my oil sector portfolio and considered adding to my positions in these companies but the current valuation and forward-looking prospects for FLC were too enticing to ignore. The oil-price pendulum appeared to swing too high to the upside at $23-$24 and then swung too low at $10-$11. Anticipating that this pendulum will equilibrate at $16-$18 does not seem unreasonable. In such a pricing environment, all oil stocks will do nicely, but FLC will fully reap the benefits of it's debt-aided expansion program. Remember, the FLC of 1998 will not be the FLC of 2001; it will have transformed itself into a larger, more diversified, and stronger oil sector company. Good luck.