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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: CrabDaddy who wrote (2759)11/6/1997 8:33:00 AM
From: Big Dog  Read Replies (2) of 95453
 
Crab Daddy-o -- There is no such thing as an "average" well. (I have a well in North Texas that pumps about 1 barrel a day, plus some gas...not exactly a barn burner) The reserves these oil companies are going after in the deep water could be like a billion barrels. Thats why they can pay huge amounts of money to "us" for the rigs.

Oil companies are not good at operating rigs. It is unlikely they will ever buy a drilling company. There have been cases in the past where this has happened and it always turned out bad. Tenneco once owned Marlin Drilling for example. They ended up selling it off for almost nothing (thanks to me I might add).

Now what you WILL see happen is partnerships with drillers. Maybe an oil company will own 50% of a rig along with a drilling contractor. But even this won't occur much these days since the drillers are so rich...they don't need the oil company. What helps the drillers is getting the multi-year firm contracts from the oil companies. This way they can justify building a new rig since they pretty much have it paid for at the end of the contract. (Can you imagine how much profit these guys will make when they have these rigs PAID for and then keep making these kinds of day rates...better get a new calculator to figure those numbers.)

What we might see is some further consolidation in the drilling industry among the offshore guys. A little bird told me that a prime candidate to be bought is MDCO...

I am off to Houston today for the weekend. Maybe I will learn some new things.

mike simmons
loosbrock offshore
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