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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: RGinPG who wrote (18741)4/10/1998 9:55:00 PM
From: marc chatman  Read Replies (2) of 95453
 
I don't know whether the Simmons report is correct or not, and I will look at it with an open mind. But something just doesn't smell right.

If the exploration and production companies have this kind of leverage with rigs at their highest utilization rate, then how did rates ever get this high in the first place? And why would the E&P's agree to higher rates in a few months? All they have to do, it would seem, is say they have cut their budgets and need a rate decrease. Are the rig operators really so weak as to roll over without at least seeing if the E&P's are prepared to shut down their projects?

I obviously don't understand how supply and demand work in the drilling business. Could anyone here please explain how rig negotiations work?
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