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: The Perfect Hedge who wrote (7927)	1/13/1998 8:57:00 PM
From: Teddy	Read Replies (1) of 95453

Yes!!! Oh Strictly Drilling Brothers (and sisters), we shall be rich: HEALTHY OFFSHORE DRILLING INDUSTRY FORECAST FOR 1998 A survey released by New York-based CIBC Oppenheimer forecasts a healthy offshore drilling industry in 1998 driven by an anticipated 9.6 percent capital expenditure increase over the next year. Given this background, Oppenheimer expects drilling contractors to post revenue growth of 30 percent and group earnings of 50 percent to 60 percent. The 92 oil and gas companies participating in Oppenheimer's second annual survey said they plan to increase capital expenditures for projects in the deep water Gulf of Mexico and offshore Africa. The additional funds also will be needed for development projects under way based on exploration success and to replace reserves and increase production levels. Oppenheimer analysts said the survey's results confirm their thesis favoring deep water and international markets. Eighty-two percent of the survey's respondents stated that they would spend more in 1998 in greater than 1,500 feet of water. This industry-wide movement supports Oppenheimer's belief that deep water drilling activity is in the early stages of an accelerating growth trend, driven primarily by technological improvements and the significantly larger size of reservoir targets. They survey also showed that deep water drilling economics are viewed favorably, particularly in comparison to drilling in less than 400 feet of water. Forty-six percent of the major integrated oil companies, which have resources to develop new deep water fields (as opposed to independents), believe that deep water drilling economics improved in 1997 and will continue to do so in 1998. Oppenheimer said it expects foreign countries to continue to open their markets, where survey participants indicated they will increase capital expenditures by 11.8 percent during 1998. Drilling hot spots include the Gulf of Mexico, the Former Soviet Union and Asia/Pacific and Africa. Two-thirds of the survey's participants indicated their budgets would increase in 1999, with the majority holding the conservative outlook of generally flat commodity prices over the next three to five years. For planning purposes, oil and gas companies hold oil prices flat in the $18 to $20 per barrel range and gas prices around $2.00 per Mcf. Oppenheimer said that as long as oil prices average $18 and above and gas prices average $2 and above, a sustained healthy offshore drilling environment should prevail. Last updated: 01/13/98. c1998 Oil On Line

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