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: Flan who wrote (5526)	12/17/1997 3:13:00 PM
From: Czechsinthemail	Read Replies (1) of 95453

Flan, If you have a continued or expanding rig shortage, the land drillers may show stronger performance going forward. But I think they are a riskier bet than the offshore and particularly the deep offshore drillers. It is simply more time and money consuming to build deep semisubmersible rigs and drillships than to build additional land rigs. That's why the supply/demand imbalance in the deep drilling sector is likely to persist longer, and companies involved in this sector should reflect that advantageous situation with higher dayrates, earnings and probably PE's. With so much uncertainty around the market fluctuations all the drilling companies have undergone, there is something to be said for the greater predictability these companies offer. On the other hand, if you bet on the land drillers and there is an expanding shortage in the land fleet, they will be able to leverage it into incredible profits. I like the predictability of the deep offshore drillers and their tight, hard to untighten market situation. But I think it depends on your forecast and your risk tolerance. Baird

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