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

To: Douglas V. Fant who wrote (38978)	3/4/1999 11:26:00 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

Doug; great point - the next play here is the lagging Nat Gas/ E&P's We are merely a smidgin from 310ish Million boe in supply and that clearly has suppported not just $14.50 Crude - but $18+ crude. Now I am NOT predicting $18+ crude anytime real soon, and I think supply numbers will bounce week to week slightly above and slightly below 320 M boe. But, if we continue to trend down under 310 M boe and OPEC either has continued 70%+/- compliance, or announces new cuts; then we will in months be seeing and hearing talk of the return of $18 crude - maybe even Q2-3 2000. So I agree $15 crude this year is right in the crosshairs. The new trading range will be $14-15 and I see $16 this year as a real possibility. Now if only OPEC doesn't get stupid... and turn on the spiggots. You made a great point a while back - That being that especially in Nat Gas - there is not adequate drilling activity to ''back fill'' for coming normalized demand. Just weeks past your original comments we got Analyst upgrades left & right to 2000 Nat Gas estimates of $2.50 - $2.75+. Again, the Street will start looking forward and these Nat Gas stocks will start moving imho. I love EVER PETD and numerous Nat Gas E&P's. BR NBL in large caps, MARY, MLRC and I like APA here as well on any dip. I think if we see OPEC cut - these Nat Gas plays will move in lockstep and are great earnings improvement plays going forward. Remember the charts from Robry of the CWEI thread - the upside earnings leverage for some companies is huge on just each $1-2 move in crude oil, or each .50 cents in Nat Gas... Per the posts tonight; The mystical ''missing'' Oil and the possibility of the EIA, or API revising their numbers really brings a real world conspiracy theory into play. The World had to have cheap Oil to allow Greenspan-Rubin & Co. et al to save the World... If these numbers get revised - and remember there is a GAO investigation ongoing - then we just might surprise eveyone on how soon we return to normal crude prices. $18 seems so far away.... but then again; not so long ago, so did $10...

To: Douglas V. Fant who wrote (38978)	3/5/1999 6:44:00 AM
From: J. Fred Donham	Read Replies (2) \| Respond to of 95453

Global Intelligence Update Red Alert March 4, 1999 Venezuela Concedes Defeat in Battle for U.S. Oil Market Share Analysis: Speaking Monday at Johns Hopkins University's School of Advanced International Studies on March 1, new Venezuelan Oil Minister Ali Rodriguez announced that Venezuela would not attempt to regain the U.S. market share it lost to Saudi Arabia in 1998. “We're not going to be in competition with Saudi Arabia,” said Rodriguez. Exporting 1.386 million barrels per day (bpd) of crude oil to the U.S. in 1998, Saudi Arabia advanced from third place to lead Venezuela, at 1.357 million bpd, and Mexico, at 1.305 million bpd. “Putting more oil in the U.S. market would not be in the best interests of Venezuela at this time, given continued low oil prices,” said Rodriguez. Rodriguez claimed that Venezuela wants to work with Saudi Arabia, other OPEC members, and non-OPEC member Mexico, to establish crude oil production levels that will help stabilize oil prices. The price of oil has been relatively unaffected by the collaborative efforts last year of OPEC and non-OPEC producers to manipulate production quotas. Worldwide crude oil prices have been stuck between $11 and $12 a barrel, the price to which they fell last year after ten years of averaging between $17 and $21 a barrel. Besides questions about OPEC's capacity, under the best of circumstances, to control prices through manipulating supply, two specific factors have been blamed for 1998's failure. Some countries are continuing to overproduce, and Iraqi oil exports are not regulated by the production agreement. Figures released by OPEC substantiate the claim that Iran continues to overproduce and that Iraqi oil continues to flow at increasing rates. Nevertheless, even after U.S. air-strikes on March 1 and 2 cut Iraqi crude exports by an estimated 56 percent, the price of oil actual fell slightly. Other factors than Iranian non-compliance and Iraqi production may be at work here. One major factor that has helped keep oil prices at historic lows is the struggle for U.S. market share among Saudi Arabia, Venezuela and Mexico. The three countries were instrumental in forging the original production cut scheme, leadership some argue was specifically intended to guarantee their positions in the U.S. market. But while producers' efforts to gain control of production and prices has been hampered by the Saudi-Venezuelan-Mexican dispute, Venezuela's apparent capitulation on the issue may present an opportunity for such schemes to work. The next OPEC meeting is scheduled to take place on March 23 in Vienna, and OPEC members have already begun calling for further production cuts, or at least faithful compliance with existing cutback agreements. Rodriguez' comments suggest that Venezuela is ready to remove one major hindrance to the effectiveness of those efforts. While production cuts may still be mathematically and politically doomed, regardless of Caracas' capitulation, the question for Venezuela is, “What's next.” Venezuela's new president, Hugo Chavez, has claimed that a “new energy model” is at the core the core of his “new macro-project for economic development.” This new model would reportedly involve promotion of investment in Venezuelan downstream operations in petrochemical and natural gas refining. Speaking to reporters following a speech at the Energy Council in Washington DC on February 28, Rodriguez carried the Chavez agenda one step further. Rodriguez said that Venezuela's state run oil company, Petroleos de Venezuela (PDVSA), may be interested in acquiring U.S. refineries expected to be put on the market by oil companies in the process of completing mergers. Rodriguez added that Venezuela's existing refining capacity would be increased under a $3 billion refinery investment plan. Venezuela already has six domestic refineries, with a combined capacity of 1.3 million bpd, as well as refineries in the U.S. and Europe with an additional combined capacity of 1.6 million bpd. Among PDVSA's U.S. holdings is CITGO. Venezuela's apparent shift in focus to downstream operations is quite understandable. Venezuela is hoping to leverage itself against any further declines in the price of oil. Whereas the average price of crude oil has dropped by 40 percent, the price of refined petroleum products has declined only around 10 percent. Even if oil prices were to recover, other oil exporting countries would be dependent on Venezuelan refineries not to preference Venezuelan crude over their own in the production cycle. Acquiring additional refineries would place Venezuela in a much better position relative to Saudi Arabia and other countries that rely heavily on upstream operations, the production and export of crude oil, as their primary means of cash flow. This policy already has promise. Though Venezuela was beaten out by Saudi Arabia in crude oil exports to the U.S. in 1998, Venezuela still exported more petroleum products, such as gasoline and jet fuel, to the U.S. The only caveat to this plan is the fact that Chavez based his presidential campaign on a platform that privileges the social welfare of the Venezuelan population over other goals. Venezuela must somehow integrate Chavez's welfare programs with its new hydrocarbon strategy of increased investment in U.S. and Venezuelan refineries. Chavez has already encouraged foreign investment in Venezuela's downstream operations. As Venezuela shifts the balance of its hydrocarbon industry from crude oil exports to refining, both at home and abroad, it will increasingly be in the market for foreign financing.