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Parker Drilling Co. Message Board

  • yahoo yahoo May 11, 2005 8:40 PM Flag

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    • Much obliged, but I don't pretend to have a
      handle on it. As a matter of fact, if there is any one
      particular thing that I am certain of, it is the fact that
      there are no handles to grasp in
      the oil sector.
      J.Paul Getty was notorious for his work ethic: He went
      to bed with the chickens, rose very early and was
      the first to the office, complete with his sack
      lunch. An interviewer once asked him as to what he
      attributed his success.
      He replied:"Rise early, work
      hard, and strike oil." I have a feeling that most of us
      here are doing well at the first two of
      attributes, we're just trying to "strike oil".
      oil" seems to have that elusive handle. T34 B

      • 1 Reply to T34B
      • The following excerpts are from an article by
        Cheryl Einhorn which appears in next week's Barron's
        (available on-line by subscription):

        >A pause that
        refreshes. That's what the sell-off should amount to in
        natural gas -- a bull market that just needed a breather.
        Prices hit a 21-month high just two weeks ago, but the
        rally was speculative, fueled by traders who took their
        most aggressive net-long positions in six

        >.. speculators bet hurricane [Bret] jitters would
        disrupt natural-gas...Mother Nature spared production
        sites. Prices
        collapsed at week's end. Thursday
        alone, they slid 6%, the biggest drop in six

        >..Allison Fleischmann [Goldman Sachs] warns, prices "should
        lower and go down to $2.25." But she adds:
        "This is hurricane season," meaning prices could rally
        back fast.

        >The bull case doesn't even
        require a cold winter, but rather simply a normal one --
        something we haven't seen during the past few relatively
        warm years. Too, the bull case may not be readily
        apparent, in part because the gas rig count has rebounded

        >That count bottomed back in April at 362 working rigs.
        Since then, it has climbed every week and today stands
        at 550. "That is substantial and beyond what we had
        anticipated," says Bob Christensen...<

        >The rig
        count has grown because oil prices have doubled since
        major OPEC crude producers decided to cut production.
        Since most energy companies produce both oil and
        natural gas, their cash flows have

        >And while many companies were initially suspicious of
        the run-up in energy prices, they've begun to believe
        it is for real and have been willing to invest some
        of their cash in boosting gas production. The
        reason: Industrial demand, which accounts for 44% of gas
        consumption, has been strengthening amid a strong U.S.

        >The housing market has been booming as well. The
        country has added a million single-family homes a year
        since 1996, and 70% of them are designed to use gas
        appliances. The good times have also added 10% - 15% more
        commercial space throughout the U.S., 13% of which use gas
        for one purpose or another.

        >Because so few
        rigs were in use last spring, gas supplies have been
        tightening. Production volumes were off 1% in the first
        quarter and 3% in the second. "It will probably drop even
        more in the third quarter," says Bill Featherston, a
        gas analyst at Schroder & Co.

        doesn't think the recent rig-count increase will be able
        to boost gas supplies until well into next year.
        There is a lag time of at least six months between
        increased drilling and any new production

        >This is significant because storage levels for gas
        remain at 6% below year-ago levels.

        >In the
        time left between now and the start of the heating
        season in November, Christensen doesn't think the
        industry will be able to store enough gas for winter to
        make up for the 7% production shortfall -- four
        billion cubic feet a day -- stemming from the lack of new

        >"It looks like the industry will go into the winter
        underfilled," he says...All told, he says,
        "it is like getting filled to 2.3 trillion cubic
        feet," Christensen avers. "That is low by any stretch of
        imagination. It means we could have fireworks this

        >How high does Christensen think gas prices will go?
        "Expect between $4 and $5 gas in the first half of 2000."

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