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

To: Tomas who wrote (5952)	1/30/1999 6:39:00 AM
From: Kerm Yerman	Respond to of 24923

Tomas / Comments On Article In my opinion, the guy is 5/8 right and 3/8 wrong. The 5/8 right relates to weather and natural gas and 3/8 wrong relates to weather and oil. I believe oil can be primarily tied to world economics rather than weather, especially the growth element in oil demand. Weather is a secondary factor. Also, I seriously believe his estimates are extremely high for 1999. However, I do believe we have bottomed and the price term of both commodities will be upward - very slowly until the 4th quarter of 1999 which is when I look for upward price momentum. I might be wrong, but I think the low in gas prices occurred at the end of August, rather than December. The monthly "average" for December might be considered a low. However, January might of averaged even lower and thus, the reason the gassy producers have taken a hit in the markets recently. The big question left is when will the second half of a cold winter commence. We are now beginning the month of February with a 10 day forecast that indicates higher than normal temperatures. If the weather doesn't turn colder beyond that time frame, such an occurance just might occur. Here is some information that was published in my free newsletter yesterday morning. By the way, anyone wishing to receive the newsletter can do so by sending me their e-mail address and requesting the publication. ( korner@borg.com ) In depth coverage is provided for oil and gas pricing, right along with commentary regarding weather forecasting. I think the newsletter is comprehensive and presented to give one an easy interpetation of what's happening primarily in the Canadian Oilpatch and the influences that affect activities there. Enough said about the newsletter, I will leave opinion to visitors here who are currently receiving it. U.S. ENERGY WEATHER Warmer Weather Ahead In U.S. Northeast & Midwest Warmer winter weather is expected in the U.S. Northeast and Midwest for most of the next 10 days, but a whiff of cold air could bring down temperatures in the northeast in the coming week, forecasters said Thursday. "Over the next 10 days, expect a warmer bias across the eastern two-thirds of the nation. But cold air in the Northeast could bring temperatures in that region down to normal to slightly below normal in the coming week," said Mark Russo, a Chicago-based meteorologist at investment house Salomon Smith Barney. Russo said there will be no extreme Arctic air moving toward the U.S. midsection during the period. Temperatures in the Northeast, the world's largest market for heating oil, will be five to 10 degrees Fahrenheit above normal in the next several days and about 14 to 20 degrees above normal in the Midwest, said the Lexington, Mass.,-based Weather Services Corp., a private forecaster. Dave Taylor, a WSC climatologist, said heating degree days remain down in major heating oil-consuming cities in the Northeast. In New York, heating degree days are down about 16 percent since the autumn, while in Boston, they are down about 10 percent, he said. The comparison is with the 30-year average spanning 1961 to 1990, he said. A heating degree day (HDD) is a measure of the coldness of the weather, based on the extent to which the daily mean temperature falls below 65 degrees Fahrenheit. An HDD is calculated by taking the difference of the daily average and 65 degrees.

To: Tomas who wrote (5952)	1/30/1999 10:57:00 AM
From: Richard Saunders	Read Replies (1) \| Respond to of 24923

Tomas - whither winter weather. Personally don't buy the spiel re: HARD WINTER still in the wings. Extended winter maybe, but days are getting brighter quicker and darker later. Sure, it's possible to have some COLD temperatures appear but (imo) a decent chunk of the historical heating season is already in the rear-view mirror. Gas storage numbers would appear to be relatively full - they can change but it's that longer daylight thing again. Totally agree with Kerm's comment re: weather being major price force with gas and global supply being driver behind oil pricing. Historically it would also appear oil supply is more than adequate given current global demands. So....... purely non-expert opinion but what's in place to fundamentally want to kick pricing of oil and gas upwards? Same thing as in the past with most cyclicals - LOW PRICES. It's been said before that low prices cure low prices and also (imo) the flip-side is true - high prices cure high prices. Take a look at some of the yr. over yr. numbers for rigs and utilization rates. Compare utilization capacity with historical levels. There's definite gloom. Why? As you mentioned - low prices are resulting in many projects being marginally, if at all, economic. A few of the expected recent announcements both N. and S. of the 49th parallel are detailing industry job loss. Activity levels in the oil arenas are definately lowering from where the recently were...... Back to the cure - low prices, especially on the oil side. The cashflow generation game is expensive and nowadays many producers are stacked full of debt and their share prices are in the toilet. How to raise dollars? Mr. Banker may I have an increase to my Line of Credit and "oh, by the way my reserve engineer guys say that I don't really have as much proven (at today's prices) reserves as we told you before" You know the bankers answer to that question - NO and LET'S TAKE A CLOSER LOOK AT WHAT YOU DO HAVE. ' How about selling some shares to the folks that are screaming to buy oil stocks. As someone joked, unless an oil co. is named YahooOil.COM it's a hard sell to interest folks in equity financing. No cash, reduced capital expenditures, production declines.......... all of a sudden (actually it'll probably be more gradual) the supply side of the equation begins to come back in line. Global economics and overall oil demand - who knows? At today's pricing there would appear to be quite a negative light cast on things like Asian economies, Latin American growth, etc. If some of the economic/growth assumptions are proved wrong then the demand side of the equation swings back from today's views....... result? Same thing as always when dealing with cyclical stuff - the cycle continues. Lots of words and mumbo jumbo. Bottomline, who knows? Here's a link to some weather stuff from almost 2 weeks ago, hope your oil stocks are holding up better than mine...... geocities.com