Energy Stat of the Week, by Marshall Adkins

Raymond James Energy Stat of the Week
by J. Marshall Adkins

Company executives at NAPE cautiously optimistic regarding 2010 oil & gas market.
February 16th, 2010

Every year, Houston hosts the North American Prospects Expo (NAPE), one of the largest gatherings of exploration and production (E&P) companies showing their wares. In conjunction with the event, we hosted our ninth annual NAPE dinner. After two days at the conference and conversations with various North American E&P and oilfield service companies, we always glean some interesting takeaways from this year's event. Usually, many of these issues are off the radar for investors and industry personnel. Some of the more interesting topics this year revolved around: 1) technological improvements and how they have changed the game (and will continue to do so); 2) the capital spending outlook for 2010 and what gas prices earn a decent rate-of-return (ROR); 3) what activity increases mean for oilfield service pricing; and 4) how Washington politics will affect the energy business.

This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The S&P 500 is an unmanaged index of 500 widely held stocks. The Oil Services Index (OSX) comprises 15 of the largest oil service companies. The S&P SuperComposite Oil and Gas Exploration & Production Index (S&P Oil and Gas E&P) consists of all oil and gas exploration and production stocks included in the S&P SuperComposite 1500 Index. Investors cannot invest directly in an index. Additional information is available upon request.

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