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TWST: Bob, does the global supply-demand picture suggest that the current oil price is sustainable, at least over the near term?

Mr. Gillon: If your definition of “near term” is two or three months, the answer is clearly yes. In fact, prices could easily jump by several dollars. However, if you think in terms of nine months to a year, prices at their current level will cause non-OPEC producers to increase capital spending and boost their output targets. OPEC is understandably reluctant to lose market share and, in the past, has raised production to counter that competitive threat. Lastly, don't forget that demand growth slows dramatically in the face of higher oil prices, all of which work together to keep this a cyclical industry.

TWST: Bob, what would you include in an overall message to investors who are considering the energy stocks?

Mr. Gillon: Buy good value and keep your seat belt buckled! Lysle named two very good companies. Anadarko Petroleum (NYSE:APC) is a very successful worldwide explorer with assets in the Gulf of Mexico, Alaska and Algeria that appear to have significant upside potential. Evergreen Resources (Nasdaq:EVER) is a much smaller niche player whose only production comes from coal seam methane wells in southeastern Colorado. Their finding and lifting costs are both among the lowest in the industry and we see no reason to expect that to change. Very profitable growth for Evergreen looks to be possible for the next five or six years.