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: Big Dog who wrote (25467)	7/10/1998 2:06:00 PM
From: Tulvio Durand	Read Replies (1) of 95453

The oil companies REALLY have wells to drill. ... Given the present oil oversupply and lack of storage, the common reaction is "who needs more oil now?". One might further incorrectly conclude there's no need to drill for more of that stuff. But, if I understand it correctly, the oil being drilled for in deep offshore is not intended for today's market, but to meet future market demand -- two, three years and further out into the future. Although that offshore oil might not be forthcoming for as long as several years from the start of drilling, the drilling co. makes money without producing any oil, ie., without adding to the oil glut. Moreover the client, Texaco et al., has the option of keeping the new oil source on hold until needed. Drilling must go on to produce new sources to replenish those presently being exhausted, otherwise oil co's would -- heaven forbid -- be selling less oil. The deep offshore oil drillers could use more rigs right now (right?) to meet oil-drilling demand. And as long as demand for deep offshore rigs exceeds supply, there will be no cancellations nor push-outs of contracts for those rigs. Do I understand this correctly, Big Dog? Tulvio

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