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

To: Think4Yourself who wrote (40080)	3/16/1999 11:02:00 AM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 95453

2 important points - comments from former Saudi Oil Minister <<DUBAI, March 15 (AFP) - A cut in oil production of two million barrels per day will be "ample" to raise oil prices, Saudi oil expert Ahmed Zaki Yamani predicted Sunday. Yamani, a former Saudi oil minister who founded the London-based Centre for Global Energy Studies, told Qatar's Al-Jazira satellite channel (eds. correct) that the mere announcement of the cuts on Friday pushed oil prices up by two dollars. But he expressed fears that some OPEC countries -- namely Venezuela and Iran -- would not make the promised cuts. "If they do not respect the agreement, the price will collapse, >> ...The last sentence says it all. - I think if the market ''knew'' that OPEC would comply (75%+) to the new announced cuts; then both Oil prices and stockprices would still be rallying. The market still has to factor in the downside potential of poor compliance. Actually imho; a moderation of Oil prices here is GOOD NEWS and does two positive things for investors. It gives us a chance to buy value on retracement and it provides a moderate Oil Price enviroment which in itself is an incentive for OPEC compliance. What do you think compliance would be if Oil soared to $16 + here ??? Personally; I hope Crude prices stay right where they are for 2-3 months minimum... give OPEC an incentive. Consolidation here is ''our'' friend... The bet is now really on what degree of OPEC compliance will we see ? ...The second point is that this consolidation mode is normal and not the least bit negative, as traders and Institutional managers review the proposed agreement. <<An oil analyst at Prudential Bache trading house, Tony Machacek, said that "the market is going to consolidate for the next few days while people assess The Hague meeting." >> I would be buying disproportionate selloffs - especially if on low volume in the strong healthy companies here. RIG on any retracement has to be on anyones list imho. Also, many E&P's have not moved in proportion to Driller & Service stocks and still represent solid value. This is a great time to do research, review fundamentals and look for anomalies. Here are 2 - alternative stocks - not discussed here on this board to a degree and with very important statistics not factored into their shareprices fully as yet imho. For those who like diversification, but with still strong upside potential: Arco (ARC - currently @ $61) makes an additional .40 cents per share in earnings for each $1 boe increase in crude prices. A $4 increase in Oil would be a gain of $ 1.60 eps . ARC trades at a current PE of 40 - this would adjust lower in a more positive crude price enviroment - but the upside value in some integrated Oil Co's is substantial. Even at a PE of 15 - this would equate into $24.00 in shareprice upside, or a 40% move. USX / Marathon (MRO) will make more money this year with $15 Oil($1.45 eps estimates) than it did in 1995 with $18.40 Oil prices (.80 eps). Cost cutting, streamlining, new technologies etc. have made some of these individual companies compelling opportunities and a good diversification from just drilling & service stocks.... food for thought. Schroeder & Co has a positive review of MRO with a target of $34 - over a 50% move from here. Compare this with rational upside expectations of CAM, or WFT for example from here. Same realistic upside - the integrateds may reach those targets in the present enviroment much easier than the OSX stocks. May be a time to diversify within the Energy sector here - still lots of bargains for those who may feel they missed the move... fwiw - I'm long an initial entry into MRO - no position in ARC. good luck