Oil and gas prices should remain high for the next year, energy executives and investors attending the recent Dain Rauscher Wessels 2000 energy conference predict. The second annual survey of registrants at the Houston event found respondents buoyed by record oil and gas prices. Many of the 135 oil and gas industry executives, institutional investors and industry observers predict that prices will remain near the current levels and energy company stocks will remain good investments. A year earlier, survey respondents were more skeptical about energy prices remaining high and predicted that oil prices would drop this year. "Optimism is very high in the energy sector," said Jim Wicklund, managing director and head of energy research at Dain Rauscher Wessels. "This is a group that has seen this market through many ups and downs. For energy investors and executives to be this bullish is quite a statement about prices." Such optimism is based on the OPEC members' solidarity, a booming world economy and slowing worldwide production, he indicated. Respondents predicted that oil prices will retreat slightly to $32.70 per barrel by year-end, and average $28.80 in 2001. By comparison, the price of a barrel of oil a year ago was $24. "The recovery we saw in the oil patch one year ago is in full swing," Wicklund said. The poll also found that the majority of respondents believe oil production will increase during the next year by an average of 3%. Conference attendees expressed confidence in investing in oilfield service and supply stocks, as measured by the Oilfield Service Index (OSX). A majority predict that the OSX will continue to outperform the S&P 500 during the next year. The OSX will move up slightly from 133 recently to 137.9 by the end of this year, they say, and to 147 by year-end 2001. "If you look back, the index is nearly triple its low of 47.4 on March 1, 1999, so there is definitely optimism that the current recovery will continue," Wicklund said. When asked about the price of natural gas, respondents say it will rise from the current $5.28 per thousand cubic feet to $5.50 at year-end. They also expect the price to drop back to $4.60 by the end of 2001. By comparison, one year ago, the price stood at $2.68 per Mcf. "Natural gas continues to be the commodity people are most bullish about," Wicklund said. The group also took a stab at which firms will comprise the next big merger. For the second year running, a marriage of Chevron Corp. and Texaco Inc. was the favorite. More than 30 companies made the list, but the two multinationals were included in more than 20% of the survey responses. On the individual stock front, the conference participants were asked to name the stocks that will give the best returns during the next year. Key Energy Services and Exxon Mobil Corp. led, followed closely by Enron Corp. "That's lofty company for Key Energy, but it has outperformed the other two during the past year, giving it an edge on momentum," Wicklund said. Attendees also were asked to predict who will win the presidential race. Republican nominee George W. Bush came out on top, but his margin was a slim 53% to 47% for Democrat Al Gore. "That doesn't overwhelm anyone with confidence in Gov. Bush," Wicklund observed. -Petroleum Finance Week