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

To: r.edwards who wrote (42966)	4/22/1999 10:34:00 AM
From: paul feldman	Respond to of 95453

To survive, an oil company has to constantly replenish what it produces. To flourish and grow, it should replace more than it produces. That's why reserve replacement ratios are so important to the oil investment community. Depending on the year, or the decade, different methods of replacing reserves have been in vogue. In a tight service market such as 1997, when drilling and associated service costs soared, oil companies sought to acquire reserves, which was cheaper than drilling or exploring. Now, the trend is leaning toward a "balanced" growth plan. That is, oil companies see the reserve acquisition market as cost effective, at the right price, but don't want to give up the market buzz that comes with a big discovery. For example, when Vastar (VRI:NYSE) announced what could be a 100 million-barrel find in the deep water Gulf of Mexico Mirage prospect, its stock shot up nearly 5 points. At this year's IPAA symposium, the emerging theme is that operators will look for opportunities wherever they present themselves. Louis Dreyfus Natural Gas (LD:NYSE), Newfield Exploration (NFX:NYSE), Vastar and Swift Energy (SFY:NYSE) were among the operators pitching investors on the theme of a balanced growth strategy. The benefit of the strategy? As several companies explained, a strong exploration focus makes them better acquirers, since they have the know-how to look for acquisitions with strong development potential. Nuevo Era On Monday J.P. Morgan upgraded Nuevo Energy (NEV:NYSE) to buy from market perform based on the company's financial strength and improving profit margins. (J.P. Morgan has performed underwriting for Nuevo.) One of the ways Nuevo is propping up profit margins is by reducing its operating costs by at least $1 per barrel of oil and gas it produces. In 1998, Nuevo's operating cost per barrel was $6.09. Lower operating costs would lower its break-even point, which, in California (where it does business), are typically higher than the industry average due to the heavy crude oil it produces. So Nuevo can operate profitably even if oil prices fall below their current mid- and high-teens levels. To the detriment of the service industry, one of the ways it is trimming costs is by renegotiating rig rates and supply boat contracts, said Douglas Foshee, Nuevo's chairman, president and chief executive. Nuevo is also the largest user of outsourcing in the industry, Foshee said. By having an outside firm operate its fields, it saves overhead. Nuevo also may be one of the few companies in the industry looking to add to its personnel rosters. "We think we'll have the opportunity to pick up some world-class exploration talent," as industry mergers squeeze experienced hands from their jobs, Foshee said. TOP GET STOCK QUOTES Symbol Name RELATED STORIES Energy Independent Producers Conference: Optimism Remains Despite Drop in Oil Stocks 4/20/99 5:48 PM ET Energy Independent Producers Conference: Optimistic Start As Oil Prices Rise 4/19/99 8:35 PM ET Energy Global Marine Dispels Doom by Reporting Record Bid Number 4/15/99 4:12 PM ET TALK TO US Send your feedback and comments to letters. -------------------------------------------------------------------------------- Check out reader letters here. STOCK NEWS ARCHIVE Read past stories.

To: r.edwards who wrote (42966)	4/22/1999 4:03:00 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

( CRK, comstock resources, Raymond James Buy 1 rating, undervalued,etc......) r. edwards - couldn't keep that one quiet a little longer huh - thanks a freekin lot....(VBG). - no mo sub $3 soup for you, or me now... CRK ...the #1 $ Dollar holding in my entire portfolio fwiw (VBG) ! - not moving to badly of late - hooo hah & drilling results forthcoming ! ...can't be tipping the hand on micro E&P plays folks - but what the heck: I'm 85% in here on these. CRK BELW PGEI - buy heavy & strong (might wait for small retracements in CRK - up strongly, but drilling results may negate any pullback) and RRC ... if you like laggards; PGEI is a ''double'' just to it's Jan 1999 high - a 3 bagger to its Sept-Oct high and a 4 bagger to its 52 week high. BELW - a double to its Sept-Oct high, a 2 1/2 bagger to its 52 week high. CRK a 2.25 bagger to Sept-Oct high & 4 bagger to 52 week high .....and shucks, I put some of that FGI RIG GIFI and those quick trade $ from HMAR MEXP BEXP etc, into these - now Big Bull - there are Buy & Holds; and then there are BUY & HOLDS (VBG) ! ...dirt cheap price to cash flow multiples - dirt cheap ! These are primarially (except PGEI is more Oil oriented - but they are accentuating Coal Bed Methane play) Nat Gas and they are getting the benefit of higher Crude & Gas prices right now .... they vastly exceed the risk profile of the OSX stocks in this present enviroment imho & have much greater near term upside as well - other than a few exceptions - not a lot of ''doubles'' in the near term left for the drillers & service stocks. << You can prove you sustained a price but you can't possibly prove future "sustainability". >> I think that if OPEC fails to comply, then the sustainability of crude oil prices is in doubt (if not proved in their minds) as the Crude Oil Traders are firmly on record as being posied to pour on the short juice if OPEc drops the ball. The Oil Majors also are on ''record'' of saying that a 1-2-3 month speculative (their word not mine) spike in crude is not enough to change Cap Ex budgets and that they believe OPEC cuts hold the key to ''sustainability''. However, remember that virtually anyone would have been happy with $15 crude oil 3 months ago fwiw... Is everyone noticing how often this word - ''sustainability'' is propping up ? There are more than a few Oilpatch Company execs themselves who are doubting the sustainability of present prices ... time will tell. The answer ? - Go Gas ! - no OPEC to worry about - the above co's are a start for small caps - BR NBL UPR for larger/mid caps, MARY MLRC and a few others... But, shorting here - other than jumping on a clearly Street led bandwagon is for the very stout at heart - if not suicidal... maybe for a quick $2-3 move after we see a blood red open day on volume...in the high flyers.