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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Broken_Clock who wrote (102231)6/6/2008 3:04:42 PM
From: Aggie  Read Replies (1) of 206329
 
Broken CLock, hello.

Drillers can, and often do, 'jack up' rates in the middle of a contract.

As many of the contracts nowadays are multi-year, many if not most of the contractors have protection from exactly the kind of inflationary forces we are witnessing now - and therefore they sometimes will index their charges against economic indicators for personnel, equipment replacement, etc. Market forces still rule

It's a great time to be a drilling contractor. I remember reading that the plains Indians living off the buffalo herds could sometimes go long periods without a kill, but once they made one -it was not unusual to gorge on up to 20 klb of meat in a sitting.

It's a good analogy. There are a lot of fat bellies out there right now in the Service Sector.

We can't forget it's a cyclical business, though. When you start to hear people say "This time it's different" it's time to quietly map your exits and start making sure the path is kept clear. It's never going to be 'different' in this business.

And, ultimately that's not how our transition from a oil economy will come to pass. It's like trying to predict a change in sea level by scrutinizing the daily tides. Right now it's a spring tide, an extreme. But that doesn't mean that sea level is changing tomorrow.

Regards to all,

Aggie
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