At one of the industry's major investment events, the buyside seemed sanguine about oil prices, energy equities and oil industry fundamentals in general. More than 450 institutional portfolio managers attended the annual Howard Weil energy conference in New Orleans, setting a new record. But they were not searching for guidance on which equities to sell after record price increases marked the past two quarters. Rather, they were looking for small- or midcap growth stories to add to their holdings. Many investors' portfolios remain overweight or at market weight in their energy positions. Few said they had any inclination to sell; most were holding. One investor running a New York-based hedge fund said he always buys on value, not by chasing a high that might go higher. He was trying to identify overlooked growth companies. (For more commentary from the conference, see "On the Money" in this issue.) The mood at the conference was very upbeat, if not incredulous, with many thinking the price of oil has outrun supply-and-demand fundamentals due to increased speculation on the Nymex. But all agreed the current cycle of low global supply and high demand is real and that high oil prices are sustainable in the $40s. "This is the most favorable business climate one could imagine for Schlumberger," chief executive officer Andrew Gould told attendees in the opening session. "Industry's access to all geographic regions of the world exceeds that of five years ago and the industry is much more sophisticated technically. Natural gas markets are expanding to a global scope." The company's seismic acquisition division, Western-Geco, is finally on the mend after five years of slow activity and disappointing results, due to increased client capital spending, he added. "We see no reason to doubt that our compounded annual growth rate will remain in double digits. It was 15% in 2004." The company aims for an after-tax return on sales of 15%.

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