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

To: Harold S. who wrote (41078)	3/28/1999 10:41:00 AM
From: Richard D	Respond to of 95453

The land drillers have traded this year as though they were going out of business with the price of oil below break-even. PTEN, a stock I follow, has traded below book value. Now that we have crossed above break-even oil prices and we have the prospect of improving supply and demand ratios, the land drillers should trade like companies that will definitely survive. Hence their P/E multiple's should expand dramatically. PTEN bought a lot of rigs in 1997 with their inflated stock as tender. They are well suited to leverage their assets in the coming year. The rumor has been that rig utilization bottomed out around 30% and is nearing 50% now. If foreign OPEC producers are limiting production and exploration, the domestic/non-OPEC drillers may be one place where the budgets are not capped, ie. U.S. land drillers. PTEN had 10X its normal volume on Friday and crossed its 200 day moving average. Trading near its book value, it's a great take-over target, or maybe institutional investors are jumping on board for the long haul. Many must have shorted this stock forecasting its demise. They are now being forced to re-think this. This is one volatile stock, having lost well over 90% of its 1997 value. The selling is always over-done in a severe bear market, and the rebound can be stunning when perceptions change. The off-shore drillers may be more financially secure, but they haven't been as savaged as the land drillers. Richard

To: Harold S. who wrote (41078)	3/28/1999 10:44:00 AM
From: gmccon	Read Replies (3) \| Respond to of 95453

Harold, In your opinion, where's the best land driller play when the turnaround does occur? Thread Gurus: In your Triton chat (OIL), I'm surprised no one commented on the recent insider buying. Greg

To: Harold S. who wrote (41078)	3/28/1999 10:56:00 AM
From: A. Fineigler	Respond to of 95453

Harold, Surely it depends what you mean by "real turnaround" ? A demand driven turnaround would definitely be a boon to land drillers. But, that's not what we have here. An oil price upturn generated by production cutbacks should mean fewer rigs needed, not more. OPEC was very clear - if other producers try to take advantage of OPEC cutbacks by increasing production, OPEC will launch an all-out price war to drive the competition out of business... not good for land drillers in the US or elsewhere. Deep water drillers, on the other hand, lock in rates far in advance. So, if the price of oil is increasing, the E&P co's are willing to pay more to guarantee availability of deep water rigs in the future. In theory, at any rate, the current quota reductions should benefit the likes of DO and RIG far more than land drillers. Maybe someone more knowledgeable in this field can explain why that may not be the case. AF