Wednesday, February 04, 2009 8:56:22 AM
If the report just put out by Morgan Stanley that Sees 2009 Oil Averaging $35 a Barrel (Update1)
http://www.bloomberg.com/apps/news?pid=20601072&sid=ajDtVPPboAAg&refer=energy is anywheres close to being reality it is bullish for well run O&G Service stocks and small oil producers..
It will give investors the time necessary to evaluate these companies on an equal footing while limiting downside risk on the possibility that supplies and services continue to spike up and down as an uncontrolable expense.. Those companies with high debt and the need for cashflow will continue to put pressure on profit margins in the service areas while offering opp. to the well run companies to expand.. Not since 1977 has the O&G Industry seen as many companies build capitol bases necessary to withstand the next period of doldrums in the O&G Industry.. Refinery capacities are at all time records while demand continues to decline worldwide..
The supply of O&G will decline due to unprofitable production put on line at much higher prices.. This will be an opp. for the smaller well run O&G producers to reachout and find marginal production at today's bargain prices.. Finding the companies to invest in will be easy as they will be the ones with earnings..
I think the Morgan report is close to being correct but IMO is about 15% too bearish.. That is about $3.50 per barrel of oil at the lows in thier report.. Ngas prices have possibly seen thier lows when they were reached thier brief return to the $3's.. hank
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