Comments on: Oil Service Stocks vs. Big Oil Stocks http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/ Thu, 20 Nov 2008 22:09:36 +0000 http://wordpress.org/?v=2.0.4 by: Stuart Hechinger http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-1569 Fri, 23 Feb 2007 20:10:08 +0000 http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-1569 Well if you look at the collaspe of the gas prices recently and what it has done to booking drill rigs it is expected to go down some 30% here in Canada and similarly affected stocks such as precision drilling trust and major drilling group presently as of Feb23/07 as oil has been going up in price to $60barrel these stocks have recovered. It is true around the time you wrote the article precesion drilling trust was appearing on value screens and mentioned as a takeover target as the trust market here is also being affected by new proposed tax rules effectively taxing away any tax benefits of being a trust. It is mainly the smaller companies that are cutting back on budgets while less of the majors and some of the majors such as Encana that have announced cutbacks with a gas bias. Gas is more sensitive to uneconominc drilling than oil and the margin is less than oil. Well if you look at the collaspe of the gas prices recently and what it has done to booking drill rigs it is expected to go down some 30% here in Canada and similarly affected stocks such as precision drilling trust and major drilling group presently as of Feb23/07 as oil has been going up in price to $60barrel these stocks have recovered. It is true around the time you wrote the article precesion drilling trust was appearing on value screens and mentioned as a takeover target as the trust market here is also being affected by new proposed tax rules effectively taxing away any tax benefits of being a trust. It is mainly the smaller companies that are cutting back on budgets while less of the majors and some of the majors such as Encana that have announced cutbacks with a gas bias. Gas is more sensitive to uneconominc drilling than oil and the margin is less than oil.

]]> by: Vitaliy http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-724 Mon, 29 Jan 2007 03:34:56 +0000 http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-724 Philip You know that I respect your opinion, but I disagree. I believe at lower $35-40 oil prices oil companies will buy less of their stock back, but will be spending money on exploration at the same high rate. Best, Vitaliy Philip

You know that I respect your opinion, but I disagree. I believe at lower $35-40 oil prices oil companies will buy less of their stock back, but will be spending money on exploration at the same high rate.

Best,

Vitaliy

]]> by: Philip Durell http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-650 Fri, 19 Jan 2007 19:24:14 +0000 http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-650 Hi Vitaliy, You make some good points and certainly O&G service companies make excellent investments, however these are just as cyclical as the companies that they serve. A comparison of Schlumberger and Exxon Mobil (to take two of the largest in each sector) over the last 5 years shows just how in step they are http://tinyurl.com/zgg7c There is also a correlation between oil prices and the amount of drilling that is undertaken - Exxon can withstand troughs and drill right through but much of the drilling is funded by cash flows from production - the higher the price = more cash flow = more drilling. At $30 to $40 oil service companies would be hurting real bad which would be a great time to pick them up or add more if you buy at today's prices. Ultimately investment in O&G depends on your view of the long term trend in pricing for energy - I happen to subscribe to the view that we are in a long term increase due to the difficulty of replacing reserves & increasing worldwide demand. In the intervening time there will be great swings in short term pricing around a long term average increase that will outstrip GDP growth - other industries that fit this are homebuilding and healthcare imo. Industries that grow faster than GDP are interesting in themselves - finding the superior companies in those industries is the key - I'd be interested in your opinions on which oil service companies that you like best Regards Philip Hi Vitaliy,

You make some good points and certainly O&G service companies make excellent investments, however these are just as cyclical as the companies that they serve. A comparison of Schlumberger and Exxon Mobil (to take two of the largest in each sector) over the last 5 years shows just how in step they are http://tinyurl.com/zgg7c

There is also a correlation between oil prices and the amount of drilling that is undertaken - Exxon can withstand troughs and drill right through but much of the drilling is funded by cash flows from production - the higher the price = more cash flow = more drilling. At $30 to $40 oil service companies would be hurting real bad which would be a great time to pick them up or add more if you buy at today’s prices.

Ultimately investment in O&G depends on your view of the long term trend in pricing for energy - I happen to subscribe to the view that we are in a long term increase due to the difficulty of replacing reserves & increasing worldwide demand. In the intervening time there will be great swings in short term pricing around a long term average increase that will outstrip GDP growth - other industries that fit this are homebuilding and healthcare imo. Industries that grow faster than GDP are interesting in themselves - finding the superior companies in those industries is the key - I’d be interested in your opinions on which oil service companies that you like best

Regards
Philip

]]> by: Naum & Fanya http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-645 Thu, 18 Jan 2007 20:50:50 +0000 http://ContrarianEdge.com/2007/01/17/oil-service-stocks-vs-big-oil-stocks/#comment-645 You are great, we agree with your every single word. You are great, we agree with your every single word.

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