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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Slyfox who wrote (4243)12/2/1997 12:08:00 PM
From: Kerm Yerman  Read Replies (1) of 24931
 
Slyfox / Drilling activity

I'll address the rate of drilling question. David Peever covered the effect question quite well.

I think 1997 will hold as a record drilling year for some time. As David pointed out, cost is now become a major factor. This, coupled with debt and cash flow will slow the pace of drilling in Canada. I would not be surprised to see drilling cut back by an estimate 10% in 1998. Companies will operate on a lean basis and work within their cash flow.

What effect will this have on the drillers and well servicing sector?
Not much. The industry is short drilling rigs currently. Even reduction of drilling in 1998 will still allow companies to operate at full capacity - or near full capacity. The coming 12 months should not be disappointing.

When looking at the IPO, assure yourself that earnings (EPS) are at a discount compared to peers which are public concerns.

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