BT Alex. Brown Raises Price, Earnings Forecasts
BT Alex. Brown analyst Adam Sieminski said he expects U.S. gas
prices to average $2.10/MMBtu this year, which is up 15 cents from
his previous forecast of $1.95/MMBtu, because of rising demand,
declining wellhead deliverability and the falling storage surplus
compared to last year. Sieminski said the tightness in market
fundamentals will peak this winter and carry strong prices through
next year. He raised his forecast for prices in 2000 to $2.40 from
a previous estimate of $2.20.
"The decline in the gas rig count is accelerating a drop in
production, while demand has remained relatively strong with the
result that the excess of gas in storage built up during the warm
winter of 1998-99 is rapidly dwindling," the BT Alex. Brown report
noted. "The normal season weakness in prices during the summer
months may fail to appear in view of the implications for storage."
Sieminski also raised his forecast for WTI oil prices to $16.50
from $14.50 and said his $17/bbl forecast for 2000 looks
conservative. As a result of the new price estimates, he raised the
earnings forecast for a group of seven major producers to an
average of 10% growth in 1999 compared to 1998. His previous
forecast excluding Atlantic Richfield was for a 9% decline in
ARCO earnings per share are now forecast at $3.27 compared with
a prior estimate of $3.20. Chevron Corp. is seen earning $3.70,
compared to $3.60. Conoco is expected to earn $1.50/share, rather
than $1.40. Exxon is expected to earn $2.95, compared to $2.90.
Mobil is seen earning $3.65, compared to $3.60. Phillips is
forecast to earning $2.30/share, compared to $2.10, and Texaco is
now expected to bring in $2.80 per share in 1999, compared to a
previous estimate of $2.60.
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