Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: pz who wrote (3137)	11/19/1997 8:39:00 AM
From: Tom L. French	Read Replies (2) of 95453

Paul Hi, The Barron's piece raises a question about earnings for this sector that I was hoping to get your view on. (Please exuse my jumping in here like this.) I've read a lot of negative reaction to this article (posted by agraff #3061 on this thread), which is understandable in a way, but I wonder if there is anything to it. Barron's says "with rig utilization around 95%... there's little opportunity for incremental revenue from new rigs... expected higher day rates next year are unlikely to compensate for lower revenue growth for new rigs." Also, my understanding is that investment in additional capacity hasn't really started yet; there aren't any contracts for constructing rigs (I did read about one with Rowan I think), and besides, it'll take a lot time before they contribute to earings. I know very little about this sector, so I'd really appreciate whatever you can share, given your expertise and knowledge. Regards TomLF

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