Found this News article interesting about rigs and drilling:
The record high interest in oil drilling coincided with a forecast by a London-based investment bank that world oil demand will accelerate over the next two years, fed by booming global economic growth.
Dresdner Kleinwort Benson estimated oil demand growth will average 2.7 percent, or 2 million barrels a day through 1999.
``The world economy is set to continue expanding strongly into 1999,'' it said. ``The implications for world oil demand are unequivocally bullish.''
Cambridge Energy Investments Ltd., which manages $1.2 billion in the energy sector, estimates $1.5 trillion will be spent worldwide through 2005 to find new oil and natural gas, vs. spending of just $330 billion between 1985 and 1995.
The earnings potential of the oil drilling business is attracting large investors, such as George Soros, who recently took a 5.23 percent stake in Houston-based Global Marine Inc.
Analysts said the drilling sector came out of a severe depression in the 1980s after a period of overbuilding and now looks set for a period of sustained growth.
The deepwater sector accounted for the increased interest in the lease sale, with bids up 88 percent over last year, said Oppenheimer & Co. analyst Carol Lau.
``We had expected a showing at least as strong as last year's sale, or a relatively flat result,'' she said.
Analysts said the industry has been haunted in the last six months by the prospect of a renewed building frenzy, similar to that of the early 1980s.
``Investors had been scared that when they saw one rig being built, there were another 237 behind it. There are currently 25 on order or being refurbished,'' said James Wicklund, an analyst with investment bank Rauscher, Pierce, Refesnes.
Due to a shortage of dockyard space and raw materials, the cost of a modern fourth-generation, semisubmersible rig has risen from $225 million to $300 million, Wicklund said.
The total number of rigs exploring for oil and natural gas in the gulf is 122, according to an analysis by Baker Hughes Inc., which conducts monthly rig counts.
``There is a lot more deepwater acreage on license than there are rigs to drill it,'' said Tony McAloon, director of marketing at Baker Hughes.
Analysts expect the cycle to continue. |
