BUY OR SELL-Has Big Oil's well finally run dry?

By Michael Erman

NEW YORK, July 25 (Reuters) - The world's largest oil companies are expected to post another round of record earnings next week as crude oil prices surged above $140 a barrel during the second quarter. But now that oil prices have dropped, is it the end of the road for Big Oil's long rally, or do they still have room to run?

IT'S A GUSHER

Michael Cuggino, who helps manage about $3.8 billion at Pacific Heights Asset Management:

"If you're a long-term investor looking for good long-term growth stories, then they are attractive and are getting more attractive because they have pulled back a little bit. As a general rule, the Chevron's (CVX.N: Quote, Profile, Research, Stock Buzz), the BP's (BP.L: Quote, Profile, Research, Stock Buzz), the Conoco's (COP.N: Quote, Profile, Research, Stock Buzz), the Exxon Mobil's (XOM.N: Quote, Profile, Research, Stock Buzz), they've all come down about 10 percent from where they were a couple of weeks ago.

"Long term, these companies are profitable with oil at much lower prices than it is right now.

"Also, demand increases when the price of oil goes down a little bit because consumers don't feel the need to cut back as much. So even if the price of a barrel of oil goes down a little bit, it's unlikely to put a crimp in their earnings to a large degree. That and a good solid dividend that most of these companies pay out ... provide a good floor for investors to own the stocks."

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Cuggino's funds currently own Chevron Corp, BP Plc and ConocoPhillips.