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: Douglas V. Fant who wrote (18930)	4/13/1998 11:40:00 PM
From: marc chatman	Read Replies (2) of 95453

Doug, interesting reading. I hadn't read the RDC 10k. Many of the other drillers' 10k's give similar descriptions of the various rigs. But the contract situation seems to differ a bit from one company to the next. One excerpt from the passage you posted would give me some cause for concern. "During those times when the markets are strong and increasing rates prevail, the Company's policy is generally one of negotiating short rather than long-term contracts for its offshore rigs because such policy allows the Company to maximize its ability to obtain the benefit of rate increases and to pass through cost increases to customers." Since "strong" markets seem to correspond to periods of strong demand, and since strong demand seems to be linked to oil prices, it appears that they are actually speculating on oil prices by attempting to negotiate shorter-term contracts. I had been under the impression that the contracts for jackups were typically shorter not because the drillers wanted them shorter, but because of the shorter-term nature of the work (as compared to deep water drilling, for example).

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