Jim,
The drillers are not affected by day to day price swing in the oil/gas market. Those figures are nice to look at but mean very little for what is going on in the drillers bottom line. It does impact the E&P companies bottom line though.
I am not going to reiterate why drillers are not being affected.
just to give you a fact : day rate was $9,500 in 1994, and is currently at $35,000-40,000 for shallow water. Deepwater, it is $75,000. New rigs are finally being built with delivery scheduled in 1999 or beyond, with contracts already signed for. Typical contracts term are 2 1/2 year committed within a 5 year period with first right to renew. Moreover, these drillers now can find venture capitals to partner with them to build new rigs because all of them have contracts first. RDC is the only one who starts building 3 spec rigs, but it just got one committed already.
that said, doesn't mean this group will go straight up w/o correction - there will be profit taking as usual, but they are no more volatile than tech, and probably safer, because they have a clear visibility of earnings. |
