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: MoneyPenny who wrote (20797)	4/30/1998 7:08:00 PM
From: Shelia Jones	of 95453

Sharon and Thread , Re: Land Driller Dayrates and Such Last night I listened to the Grey Wolf, GW, conference call because Sharon got me interested in the big volume and it made Nightly Business Report - ( I have a crush on Paul Kangas ). They gave the following information from their Q1 98 c.c. that I thought would be of interest concerning utilization and dayrates in general: They have 106 domestic rigs and 6 internationally. Of those 81 of the domestics and 2 of the internationals are currently in use. 4 rigs are under refurbishment and 12 are in inventory that will not be refurbished until they have 90% utilization. Fully 86% of their rigs are used for natural gas well drilling. No projects have been cancelled but some have been defered. Gas prices were 15% lower than year ago. Bid rates are down 12% from Q4 97. Has seen an increase in bidder quests in last 2 weeks. Utilization was 81% in Q1 97, 96% in Q4, and currently (this week) is 75%. (up from 70% last week) The average dayrate increased from $7700 in Q4 97 to $8100 in Q1 98. This translates into a 12% profit margin. They are retaining trained personel without work in their specialty buy paying them their regular wage but having them do ruffneck work. Tom Richards the CEO and President said current conditions are short term but didn't keep him from getting heartburn. Said conditions do not change the underlying strong fundamentals. He said that production of gas is flat but that the number of rigs looking has doubled since 1995! (Does this sound at all right ?- he had an accent but it sure sounded like this is what he said.) Rigs dayrates are priced by horsepower : $ 8500 + fuel for the larger ones to $7200 + fuel for the smaller ones. The larger horsepower ones have come down in price proportionately more. Their markets are South Texas, Gulf Coast, Arkansas./Texas, Mississippi, and Alabama. Said South Texas was their strongest market.(86%) Revenue is 14% from turnkey, 82% daywork and 3% trucking operations. Stated they could make an acquisition 40% to 60% cheaper than a year ago. The anaylsts questions were often prefixed with statements such as "We all expect conditions to improve". They actually sounded sincere. (I don't plan on making any GW purchase myself but thought the information might be useful regarding land drillers.)

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