From: TIMOTHY@CCU1.AUCKLAND.AC.NZ
Date: Sat, 8 Mar 1997 05:20:38 -0800 (PST)
To: cypherpunks@toad.com
Subject: $2 to $20 per share in less than a year.
Message-ID: <199703081320.GAA03042@earth.usa.net>
MIME-Version: 1.0
Content-Type: text/plain


         $2 to $20 per share in a year! Yeah sure what a joke! That is probably 
what you are thinking. I would be thinking the same thing, if someone told me 
the same thing. But the facts speak for themselves and they reveal what will happen,
if you are or are not involved. 
         The company is Westrend on the Vancouver stock exchange. Ticker WRV
 and WTNGF. Alamo Logging Services Inc. ("Alamo")

The company announced that it intends to acquire Alamo upon terms yet to be
negotiated. Alamo has been in the oil & gas logging business in south central Texas
for over 4 years. It is been consistently profitable and has an excellent reputation
with several major operators in the area, including Texaco, UPRC, and Chessepeake.

As an oil & gas logging company, Alamo provides operators with a graphic "look" at
what they are drilling through. This is important as it advises drilling technicians
where they should focus their drilling efforts for optimum results. As a result of
being able to offer this service as part of its drilling package, Westrend is able to
offer operators a comprehensive approach for their drilling requirements.
They got ALAMO
Precision Horizontal, Inc. ("Precision")

The purchase of Precision was completed on June 24, 1996. From this point
forward, Precision's earnings will be consolidated into Westrend's financial
statements. Precision's unaudited financial statements show a profit of US $171,785
for the fiscal year ending January 31, 1996 and appraised assets of over
US $2,000,000. We estimate Precision's gross earnings will exceed $200,000 from
February 1, 1996 to June 30, 1996.

Precision specializes in the drilling of horizontal oil & gas wells using its own short
radius and conventional mid radius steering tools. Precision is able to provide
complete well drilling services to meet the demands of most operators.

Precision successfully completed the first of a series of "re-entry" wells in 1995 in
conjunction with the US Department of Energy and the University of Michigan. It is
being invited back to complete several wells in the fall in response to the very
favourable results from the first well.

Precision has several opportunities before it including several working interest and
retail wells in Oklahoma and Tennessee. These are currently being negotiated.
They got those too.

Adjusted Target: $8-10 - Time Frame: 6 months 
Adjusted Target: $15-20 - Time Frame: 12 months 

Dividends: .05 - .10 /share 

Get the scoop and the package: 1-888-784-6837 

Info: 
***** 
1) Press Release due this week. 
2) Press coverage in the Vancouver SUN 
3) Press coverage in the Financial Post 
4) Earnings could be as high as .60++ this year. 
5) Nasdaq Listing in July after dividends are announced. 
6) Large investor network plugged in last Thursday. 
7) Very near term $3-5. 
8) Approx. estimate shakeout at $2 is 500,000, this is 
needed. Stock must be cleaned out. Do not get shook 
out. 
9) Will probably trade $1.90 - $2.10 for a couple days. 
Average Up opportunity. 
10) Approx. 90% of stock is in friendly hands. 
Friendly = educated people in for long term. 


"Approximate CRASH time. WHY? STOP LOSS ORDERS. YOU SHOULD NEVER PUT IT 
A STOP LOSS ORDER. THE TRADERS ON THE FLOOR WILL PURPOSELY DIP IT BELOW 
YOUR STOP LOSS POINT AND YOU WILL DUMP YOUR SHARES KILLING THE MARKET 
WE HAVE WORKED SO HARD TO MAINTAIN. 

STOP LOSS ORDERS TELL ME YOU HAVE NO CONFIDENCE IN THE STOCK AND A SLIGHT 
PRICE SWING CAUSES YOU TO BAIL ON A STOCK HEADED FOR $10???? DOES THIS 
MAKE SENSE???? THIS IS NO B.S. STOCK PLAY. THIS IS NOT CRAP. THIS IS 
A COMPANY WITH EXCELLERATED EARNINGS AND UNLIMITTED POTENTIAL. YOU 
SHOULD SLEEP AT NIGHT AND HAVE NO WORRIES BUYING $3 STOCK. 

GREENLINE HAD STOP LOSS ORDERS IN AND DUMPED 50,000 SHARES. HELLO? 
I AM JUST HOPING IT WAS NOT ONE OF MY READERS. YOU HAVE JUST SOLD A 
HUGE POSITION IN AN AMAZING STOCK TO THE BOTTOM FEEDERS. 
50,000 SHARES X $10 IS $500,000 LATER THIS YEAR. STUPIDITY. "

"I have been told to tell you, and I totally agree, that IF YOU PEOPLE ARE 
SO NERVOUS ABOUT SLIGHT CORRECTIONS THE I SUGGEST YOU EXIT THE STOCK 
GRACEFULLY. I DO NOT WANT TO HOLD HANDS. I FEEL LIKE BANGING MY HEAD ON 
THE WALL WHEN I SEE THE CRAP THAT HAPPENED TODAY. THIS IS NOT A HYPED 
STOCK. THIS IS AN EARNINGS STOCK AND I CAN'T WAIT TILL IT GETS OFF THE 
VSE AND ONTO A RESPECTABLE EXCHANGE. 

The Press Release this morning: 
------------------------------- 

Whoever put the title on the release should be shot. The title makes 
it look negative but it is the most positive press release I have read 
in a long time. 

Basically reallocation of funds, more bang for the buck. Very positive 
making Magnum a total cash deal.... 

Earnings projected at .37/share!!! "

Westrend Natural Gas - Vancouver 
******************************** 

Oh ya, Westrend is also: WTNGF (symbol) on the pink sheets for you American 
people. 

There is concern about the eps. Even if you take th .28 a share and multiply 
it by an average of 15 PE ratio it is a $4.20 stock. The company is on a rapid 
pace, do you think they are just going to stop at .28?? Watch and see what 
happens. 

One more thing about EPS. Do you think Oil and Gas companies, or any other 
company pays the full tax??? Absolutely not. I personally think it is rediculous 
to post this number. You see profits can be used to drill oil wells, pay out 
dividends, and other things. I would bet all my shares in my account that 
Westrend won't pay the 23.2% tax stated in this news release. 

Press release, comments below: 
------------------------------ 

Westrend Natural Gas Inc 
WRN 
Shares issued 16041157 
1997-03-03 close $1.79 
Wednesday Mar 5 1997 
News Release 
Mr Mark Roberts reports 
This press release clarifies the financial projections stated by management in its 
March 3 1997 original press release. The projections were based on a number of 
assumptions and hypotheses which are detailed below. The company has 
provided the exchange with a projected consolidated statement of operations for 
the relevant 12 month period, together with a detailed breakdown of projected 
results for each corporate division. 
The time period covered by the projections is 12 months beginning May 1 1997. 
The rationale for the start date is that substantially all of the referenced trucks & 
equipment are expected to have been purchased and/or supplied by that date. 
This is consistent with the disclosure in the original press release wherein the 
company stated projections were based on the assumptions that purchases of 
equipment would be complete and the equipment would be fully utilized. 
The projections are designed to demonstrate earnings expected if the proceeds 
from the referenced private placement financings were applied in the manner 
stated and may not be appropriate for other purposes. 
Management confirms that the net revenue figures stated in the original press 
release for each of its corporate divisions were prepared on a before tax basis. 
Arising from the detailed review of the projections requested by the exchange, 
management have determined that the net revenue before tax figures should have 
been stated at a slightly higher level and are accordingly so stated below. 
Management have been advised by the exchange, in accordance with the 
requirements of Exchange Policy 7 and the adoption therein of the principles 
contained in the CICA Handbook, that earnings per share must be calculated on 
an after tax basis. Management was employing managerial accounting principles 
and hence the income tax consideration was omitted from such calculations. 
The diluted share total of 24.8 million shares was calculated by adding the current 
18,508,484 issued and outstanding shares, 1,538,461 deemed shares from the 
recently completed special warrant placement, 1,300,000 deemed shares from the 
$780,000 placement (which will be special warrants), 2,000,000 deemed shares 
from the $1.6 million placement (which will be special warrants) and 1,500,000 
shares which is the maximum issuable on the acquisition of Alamo. The share total 
does not include exercise of any outstanding share purchase warrants or stock 
options. There are no other proposed issuances of shares by Westrend. 
Accordingly, Westrend is re-stating the net income before tax numbers for each 
corporate division, net income before tax as a whole, net income before tax per 
share, and earnings per share numbers, as follows: 
All dollar amounts in this release are in US dollars unless stated otherwise. 

Projected net profit 
before income tax 

(a) Alamo Wireline $4,042,500 
(b) Precision Horizontal Inc 1,641,000 
(e) Taylor Rig 1,490,000 

Projected Net Income before 
tax (after deduction of 
parent company projected 
expenses of $600,000) $6,573,500 


Projected net income $5,048,448 

Net income before tax per 
share (on 24.8m shares) US$0.27/share 
C$0.37/share 
Consolidated earnings 
per share (after tax 
on 24.8m shares) US$0.20/share 
C$0.28/share 


The projections are designed to demonstrate earnings expected if the proceeds 
from the referenced C$780,000 and C$1.6 million private placement financings 
were applied in the manner stated. 
The projections have been prepared using assumptions that reflect Westrend's 
planned courses of action for the period covered given management's judgment as 
to the most probable set of economic conditions, together with one or more 
hypotheses that are assumptions which are consistent with the purpose of the 
information but are not necessarily the most probable in management's judgement. 
The overall assumptions are as follows: 
1. The parent company, Westrend, will have expenses of approximately 
US$600,000 during the period. 
2. The two recently announced private placements of C$780,000 and C$1.6 
million will have been closed well in advance of May 1 1997. 
3. As more specifically stated below, that the majority of the equipment purchases 
will have been completed by May 1 1997. 
4. As more specifically stated below, arising from the significantly increased 
demand for the services that Westrend is planning to be able to offer to the oil & 
gas industry, that reasonable utilization/service rates are obtainable. 
5. It is hypothesized that for the period, the existing strong demand for the types of 
services that Westrend plans to offer, will remain throughout. Management believe 
there is sufficient analysis published in trade publications to support this view. 
6. The US corporate tax rate for companies of the nature of Westrend and its 
subsidiaries in Texas is assumed to be 23.2%. 
7. All figures are estimated to be within plus or minus 15%. 
The specific assumptions and hypotheses for each corporate division are as 
follows: 
1. Taylor Rig 
The following assumptions and hypotheses have been made: 
a) 
Revenues are based on the assumption that 23 service rigs and 15 wireline 
trucks (two at cost to Alamo) will be sold in the 12 month period; 

Service Rigs 
b) 
It is assumed that on average the service rigs will sell at prices equal to 
$350,000 (all figures in US dollars) as being reflective of market; 

Wireline Trucks 
c) 
It is assumed that the average wireline truck sold will carry a sufficient number 
of options to be priced at $250,000 per truck as being reflective of market; 
and 
d) 
It is assumed that once Taylor Rig has filled Alamo's initial order, sales will run 
at one per month. 

2. Alamo Wireline 
The following hypotheses and assumptions have been made: 
a) 
Alamo will be operating seven wireline trucks during the period, each truck 
operating 20 days per month at between $3,300 and $3,900 per day. During 
the period, direct operating costs will be approximately $1,025,500, wages 
and salaries will be approximately $690,000, and equipment debt repayment 
will be approximately $71,000; 
b) 
Alamo will benefit from significant economies of scale by running seven trucks 
out of one main office, and a minor satellite Louisiana office, up from two 
trucks; 
c) 
Alamo will use the five additional trucks at lower cost and greater efficiency 
due to Alamo being able to purchase brand new equipment, and Alamo will 
benefit from its strategic alliance with Precision Horizontal Inc, a subsidiary of 
Westrend, since a package of services can he offered to customers, 
particularly MWD services in conjunction with wireline logging; 
d) 
Any slippage in net profits per truck are assumed to be picked up by a 
probable expansion of Alamo's fleet of trucks which can be funded out of 
projected cash flow; 
e) 
As stated in the original press release, Alamo is hiring experienced, 
well-connected wireline logging services salesmen who are assumed, along 
with Alamo's existing sales manager and possible further additions, to be 
capable of finding sufficient work immediately for the four new trucks to be 
delivered by Taylor Rig on May 1 1997; and 
f) 
The current expansion in oil & gas drilling activity which has engendered 
strong demand for wireline logging services is assumed to hold steady during 
the period. 

3. Precision Horizontal Inc 
The following hypotheses and assumptions have been made: 
a) 
Precision will be contracted to provide its horizontal drilling services at $7,000 
per day, 22 days per month, and incurring approximate operating costs for its 
horizontal drilling business of $719,000, and wages and salaries of $205,000; 
b) 
Precision will have acquired two MWD systems that will each be operated at 
$4,000 per day, 20 days per month, incurring approximate operating costs of 
$602,000, and wages and salaries of $205,000; 
c) 
It is assumed that the strong demand for MWD services will remain strong 
throughout the period; 
d) 
It is assumed that the second system of MWD equipment can be financed out 
of a combination of working capital and funds out of projected cash flow; 
e) 
The MWD business of Precision will benefit from its strategic alliance with 
Alamo since a package of services can be offered to customers; and 
f) 
A marketing program in conjunction with Alamo will be set up to secure a 
steady supply of business for both horizontal drilling and MWD; 
g) 
The current expansion in oil & gas drilling activity which has engendered 
strong demand for wireline logging services is assumed to hold steady during 
the period. 

Actual results achieved for the period covered will vary from the information 
presented and that variation may be material. 

--------------------------------------------------------------------------------- 

Very positive release. It should start trading tomorrow sometime. The VSE has 
been satisfied about the EPS projections. 

I remain bullish on this equity, I think at the rate they are expanding that 
$10 is in the cards this summer sometime. It seems like management is solid 
and the stock reflects that. 

When Westrend crashed on Monday it rebounded VERY quickly. This shows that the 
stock momentum is up. 

>From Monday's release: 

Westrend is in negotiations to raise up to $10 million at or above current market 
prices which would include the offering of the 3.2 million shares that had been 
previously reserved for issuance to the Magnum shareholders. Negotiations 
involve a series of brokerage houses out of New York (which brokerages would 
also provide sponsoring of Westrend if, as currently planned, it becomes listed in 
the US) and from a number of private investors. A meeting with these parties has 
been orchestrated by the president of Westrend, Mark Roberts, for this week in 
San Antonio, Texas, which will include representatives from each of Westrend's 
associated companies to make a detailed proposal for the use of the proposed 
financing proceeds. 

These meetings with NY brokers tells me that Westrend is going verticle. They are 
looking to expand at a rapid pace which requires financings and exposure. 
A US brokerage house would definately be a huge asset to this verticle climb. 

Tomorrow should be exiting. More Oil and Gas articles, thanks to my subscribers: 
********************************************************************************* 

The Wall Street Journal Interactive Edition-March 4, 1997 
Experts Say Capacity Shortage 
May Prop Up Crude-Oil Prices 

By PETER FRITSCH 
Staff Reporter of THE WALL STREET JOURNAL 
HOUSTON-Oil prices have plunged 20% this year, but some industry experts 
believe the downturn may be nearing an end. 
Many blame short-term factors, such as the mild winter weather and politics 
surrounding Iraq's return to world oil markets, for the recent declines. 
Looking ahead, economists believe the market will be buoyed by a shortage of 
capacity in the oil-services industry. 
After a decade of slimming down, oil-service companies are having difficulty 
keeping up with the explosive growth in world-wide demand. The bottleneck is 
so severe that some economists say oil prices could remain relatively firm for 
the next several years even if there is a slowdown in the economy. 
Despite the recent fall in prices, the current benchmark price of $20.25 a 
barrel is still above year-earlier levels, when there was widespread talk of 
an imminent price collapse. Prices ended up surging in the second half of 1996, 
at one point reaching an 11-year high of about $28 a barrel (excluding the 
1990 price jolt during the Persian Gulf War). 
Reflecting the industry's continued bullishness, Cambridge Energy Research 
Associates, a top oil consultant, recently lifted its forecast for oil's 
minimum price over the next few years to $19 a barrel from $17 previously. 
The upward revision was echoed by the secretary general of the Organization 
of Petroleum Exporting Countries, Rilwanu Lukman, who recently said the era 
of oil for $15 to $20 a barrel has given way to $20 to $25 a barrel. 
An 'Era of Higher Prices' 
"People say it feels like 1981 and worry that we'll go bust again," says 
PanEnergy Corp. director Matthew Simmons. "But the era of higher prices 
has only just begun." 
If such industry watchers are right, oil prices could prove to be less 
sensitive than before to any economic downturn. That would be bad news for 
motorists and industries such as airlines that are heavily exposed to fuel 
costs. And if a long-awaited economic slowdown does materialize, stubbornly 
high oil prices could delay a recovery. 
Still, oil economists aren't predicting sharply higher prices either, 
tempering any negative impact on the economy. "I don't see a dramatic drag," 
says Donald Ratajczak, director of Georgia State University's Economic 
Forecasting Center, who last week raised his 1997 outlook for oil prices to 
an average $21 a barrel. He figures that if the economy weathered last year's 
high oil prices, it can weather this year's too. 
What predictors of petroleum prices can't know, says Mr. Ratajczak, is the 
extent to which sources like developing nations and North Sea production 
unexpectedly tip the balance, flooding the market with excess supply and 
driving prices lower. Indeed, Philip Verleger of the Charles River 
Associates consulting firm sees a potential supply imbalance pushing oil 
prices down to $18 a barrel this year. 
But there is plenty of reason to think that won't happen easily. 
World-wide oil and gas production as a percentage of production capacity 
is currently at about 95%, a flat-out rate matched only during a major 
political event such as the Arab oil embargo and accompanied by short- 
lived price surges. Put simply, the industry can no longer keep up with 
demand by simply turning on old taps, as it has been doing over the past 
decade. 
Evidence of a Bottleneck 
Tapping new supplies, then, will be crucial in keeping up with demand. 
But there is mounting evidence of a bottleneck in oil services-the 
industry that supplies the tools needed to get the job done. Consider 
that today, for example, every deep-water drilling rig in the world is 
now at work. The eight rigs plying the Gulf of Mexico's deep waters are 
about 45 short of the number needed to drill all the blocks companies 
have under lease and are promising to develop. Twenty companies 
manufactured drill pipe 15 years ago. Today there are five, with far 
less total capacity. 
The oil-service industry's plate "is completely full," according to 
Federal Reserve Bank of Houston economist William Gilmer, adding that it 
will be difficult for producers to meet their ambitious exploration 
goals. Perhaps in a sign of things to come, Phillips Petroleum Co. said 
recently that it had to delay development of a major discovery in the 
North Sea for almost a year due to a lack of rigs. Adds Raymond Plank, 
chairman of oil and gas producer Apache Corp.: "We are extremely 
drilling-constrained." 
Assuming demand grows at the same rate as it has over the past five 
years, the International Energy Agency in Paris predicts the world will 
need at least another 1.8 million barrels a day of oil this year, a 
2.5% increase. That amount could be higher if developing-country demand 
continues its recent explosion. Figure into that equation the rate at 
which existing oil and gas fields are depleted, "and there's no 
conceivable way to achieve even 25% of this additional supply without 
increasing oil-service activities at a dramatic rate over the next 
few years," says Mr. Simmons. 
More Volatility Expected 
The bottom line: The lack of infrastructure means supply will be hard- 
pressed to keep up with demand, providing a strong floor under oil 
prices and a weight on the economy. The lack of yesteryear's large 
supply cushion also means oil prices will be more volatile, just as 
they proved to be last year when gasoline and heating-oil prices soared. 
"All you need is a refinery accident or a little war and you'll have 
a major price blowout," says CERA managing director Joseph Stanislaw. 
Conversely, demand has been so healthy that when world output rose 
by 500,000 barrels a day last July alone, there was hardly a price 
ripple. 
As rosy as things might appear, though, this boom isn't convulsing 
the nation like that of the early 1980s. Executives aren't talking 
about $100-a-barrel oil at Houston's Petroleum Club. Gone are the 
bumper stickers urging Texans to "Drive 75, Freeze a Yankee Alive." 
And because improved technology is doing a lot of the work of 
roughnecks these days, Northern job seekers aren't rushing south 
for a piece of the action. 
Still, the boom is having positive ripple effects in U.S. energy 
centers such as Houston. Building permits in Houston surged 19% 
last year, and local employment growth outstripped that of Texas 
as a whole for the first time since 1990. Houston's tony Ritz- 
Carlton will in April open its lobby dining room, popular with 
power breakfasters, to dinner at the request of business travelers. 
Local luxury-auto dealership Momentum BMW booked a 20% increase 
in sales last year, according to sales manager Louis Weibel. 
Employment and wages in the energy sector are also on an upswing. 
Baker Hughes Inc. of Houston will hire 500 new field workers and 
250 engineers this year, increases of 20% and 33% respectively, 
and is having a tough time finding them. Oil driller Rowan Cos. 
had to boost wages 10% last year to keep its workers from 
leaving. Rowan Chairman C.R. Palmer says he's considering another 
5% to 10% pay increase this year. 
Such signs embolden even the most hardened veterans of the 1980s 
bust to tempt fate, it seems. "Here goes," says Mr. Palmer, 
clearing his throat. "Boom. There's just no other word for it." 

I give full credit to: 

Copyright (c) 1997 Dow Jones & Company, Inc. All Rights Reserved. 

-------------------------------------------------------------------- 

Dow Jones News Service-March 4, 1997 
Oil-Services Stocks Rally As Optimism Returns 

By Loren Fox 
NEW YORK (Dow Jones)--Stocks of oil-service and drilling companies 
fairly gushed Tuesday, a sign that the recent selloff in the sector 
may be ending. 
Optimism returned to the market regarding companies that rent rigs, 
make drill bits, generate geological information and provide other 
oil-field services and equipment. 
Oil drillers were the best performing industry group Tuesday, as 
the Dow Jones index of six drillers rose 9.9% on a market 
capitalization weighted basis. Among the leaders were Global 
Marine Inc. (GLM), up 2 1/4, or 12.7%, at 20; and Ensco International 
Inc. (ESV), up 5, or 12%, at 46 1/2. 
Not far behind was the Dow Jones index of five oil-field equipment 
companies, which rose 4.5%. The leaders included Schlumberger Ltd. 
(SLB), the bellwether of the group, which was up 4 3/4, or 4.8%, at 
103 1/4; and Halliburton Co. (HAL), up 3 1/4, or 5.3%, at 65. 
One spark for Tuesday's rally was the optimism ahead of Wednesday's 
sale of exploration leases in the Gulf of Mexico. A record 1,790 
bids were tendered to the U.S. Department of the Interior for 
1,032 tracts. To many, that's a signal that oil companies aren't 
about to slow the pace of spending on exploration and development. 
''There aren't enough rigs to go around,'' said Robert Trace, an 
analyst at Hanifen Imhoff Inc. 
Another factor setting the table for Tuesday's feast was the fact 
that the stocks had fallen so far in recent weeks. After rising 
in January, investors took profits as good quarterly earnings 
reports rolled in. However, short-selling and momentum investors 
pulled the sector down further in February. At the same time, 
oil prices fell roughly 20% to $20.50 a barrel, which turned 
the mood overwhelmingly bearish. 
Before Tuesday's rebound, Schlumberger had fallen 15% from its 
January high. Diamond Offshore Drilling Inc. 
(DO), the largest deep-water rig specialist, had fallen 25% 
from its January high. Tuesday, Diamond rose 5 3/8, 
''The typical oil services stock fell 25% to 30%, which is 
a healthy correction,'' said Kenneth Miller, executive vice p 
resident at Cambridge Investments Ltd., a money management firm. 
''There was so much negativism coming out of the street, it's a 
sign that the group hit bottom.'' 
''It was absolutely overdone,'' said Yves Siegel, an analyst at 
Smith Barney Inc. 
In recent days, some analysts started touting the stocks as 
buying opportunities. 
''The stocks were selling at very low multiples,'' said Miller. 
Even fans of oilfield stocks feel the nosedive they took in 
recent weeks began as a logical correction. Many industry 
observers admitted stock prices got ahead of themselves in 
January. Good news from 1998 - let alone from 1997 - was already 
factored into the stocks. 
True, earnings are expected to continue rising for the group. 
For 1997, Schlumberger's earnings are expected to be 26% higher 
than last year at $4.38 a share. For Global Marine, 1997 
earnings are expected to soar 111% to $1.33, then rise another 
39% in 1998 to $1.85. 
But while the stocks rose in January in advance of earnings 
reports, as they had in the last few quarters, this past quarter 
the sector rose faster. The key driver was momentum players, 
who buy stocks that are already rising. 
One fund manager said a classic example of momentum buying was 
Cliffs Drilling Co. (CLDR), a second-tier drilling contractor 
whose stock rocketed to a high of 79 1/2 in January, or a 
whopping 38 times its projected 1997 earnings. 
Cliffs fell to 42 3/8 Monday, and rose 9.5% to close at 46 
Tuesday - 22 times its projected 1997 earnings of $2.08. Many 
analysts said the group has returned to more realistic 
multiples. Smith Barney's Siegel said drillers should trade at 
12 to 15 times earnings. 
''I don't necessarily think of these as growth companies,'' 
said Hanifen's Trace, because in the end, they are based on 
the cycles of spending from oil companies. But Trace feels 
20 times earnings is reasonable given drillers' growth in the 
next few years. 
One result of January's expansion of earnings multiples, however, 
was to make the recent selloff a more dramatic decline. The 
recent pullback in the stocks was very much influenced by the 
simultaneous drop in oil and gas prices, which exert a strong 
psychological effect on the sector. But observers emphasized 
that the drop in oil prices shouldn't hurt the earnings of 
oil-services companies. 
It is a connection that isn't well understood, analysts contended. 
The fact that crude oil fell below $21 a barrel doesn't mean that 
oil companies started to cancel rig contracts or shut wells. Most 
oil companies, having been burned by the collapse in oil prices 
in the mid-1980s, budget their oil and gas projects so they make 
money if oil sells at $17 or $18 a barrel. As a result, current 
oil and gas prices are not a danger to oil services companies. 
''It's actually better for the oil services stocks for oil to 
trade between $18 to $22 a barrel,'' said Siegel, because that's 
a high enough price to encourage drilling while not so high that 
it hurts demand. 
Many analysts believe the oil-services industry is in the early 
stages of a multi-year upturn. That's why they see the recent 
deflation of oil services stocks as buying opportunities. ''It's 
a long-term story,'' Siegel said. 

Full credit to: 

Copyright (c) 1996 Dow Jones & Company, Inc. All Rights Reserved.