RIG INFORMATION
Weekly Rig Count Dips by Four
The number of oil and gas rigs operating nationwide fell by four to
750 this week, Baker Hughes Inc. (NYSE:BHI) reported Friday.
There were 974 rigs operating in the United States during the same
week last year.
Of the rigs running this week, 524 were exploring for natural gas and
226 for oil.
Houston based Baker Hughes has kept track of the count since 1940. The
tally peaked at 4,500 in December of 1981 during the oil boom. It
dropped to a record low of 596 in the summer of 1993, exceeding the
previous low of 663 in 1986.
The rig count represents the number of rigs actively exploring for oil
and natural gas.
Rotary Rig Count
10/9/1998
This Week Year
Location Week +/- Ago +/- Ago
Land 616 - 2 618 -221 837
Inland Waters 21 1 20 5 16
Offshore 113 - 3 116 - 8 121
United States Total 750 - 4 754 -224 974
Gulf Of Mexico 109 - 2 111 - 9 118
Canada 170 9 161 -256 426
North America 920 5 915 -480 1400
Breakout Information This Week +/- Week Ago +/- Year Ago
Oil 226 - 3 229 -166 392
Gas 524 - 1 525 - 54 578
Miscellaneous 0 0 0 - 4 4
Directional 186 - 4 190 - 31 217
Horizontal 30 - 1 31 - 43 73
Vertical 534 1 533 -150 684
Major State Variances This Week +/- Week Ago +/- Year Ago
Alaska 12 0 12 1 11
California 26 - 4 30 - 8 34
Louisiana 157 - 3 160 - 38 195
New Mexico 46 - 1 47 - 13 59
Oklahoma 87 2 85 6 81
Texas 256 5 251 -129 385
Wyoming 37 - 2 39 - 8 45
U.S. Gulf rig count falls eight to 136
There were 136 rigs under contract in the U.S. Gulf as of October 9,
down eight from the previous week, Offshore Data Services said Friday.
The utilization rate for rigs working in the Gulf, based on a total
fleet of 176, was 77.3 percent, the lowest level since May 1995.
The number of working rigs in the European/Mediterranean area remained
at 109 rigs under contract out of a total fleet of 113, a utilization
rate of 96.5 percent.
The worldwide rig count was 530 out of a total fleet of 610, with a
utilization rate of 86.9 percent.
CAODC Weekly Western Canadian Rig Count - Oct 6
WEEK OF OCTOBER 6 VERSUS SEPTEMBER 29, 1998 DRILLING
MOVING DRILLING DOWN TOTAL YEAR AGO
ALBERTA 0/0 162/148 296/307 458/455 344
SASK. 0/0 18/ 24 55/ 51 73/ 75 101
B.C. 0/0 14/ 16 29/ 28 43/ 44 30
N.W.T. 0/0 0/ 0 2/ 2 2/ 2 1
MAN. 0/0 0/ 0 1/ 1 1/ 1 1
TOTAL 0/0 194/188 383/389 577/577 477
Moving = Currently under Contract, but not at full rate
Total Line is Total Western Canada
Figures supplied by Canadian Assn. Of Oilwell Drilling Contractors
Oil Rig Rates Fall 30-40 Pct In Asia In 6-8 Months
Daily drill rig lease rates -- a key indicator of the health of the
upstream oil and gas industry -- have declined by 30 to 40 percent in
the Asia Pacific region in the last six to eight months, independent
rig contractor Century Drilling Ltd said on Wednesday.
The drop in rates in both land and offshore rigs coincides with a
decline in rig utilisation levels to record lows amid Asia's deepening
economic crisis, Century Drilling managing director Andrew Young said.
"It's dropping away sharply with the oil price," Young said.
"Day rates have dropped by 30 to 40 percent, particularly in
Indonesia, in the past six to eight months," Young said.
Daily land rig rates have declined to around US$10,000-$20,000 a day
currently, while offshore rig rates have slipped to between $80,000
and $150,000, Young said.
At the end of September, there were 96 land rigs in operation in the
Asia Pacific region and about 12 offshore rigs, the lowest figures on
record, Young said.
World crude prices have sunk on declining demand in the once fast
growing economies of Asia and perceptions of a mounting supply
overhang.
Benchmark NYMEX crude was last traded on Wednesday in Asia at $14.34
per barrel, more than six dollars below the year-earlier price of
$20.70.
Crude prices have been weak throughout 1998 and analysts have
predicted sustained weakness through next year as well.
Commentary - OFFSHORE DRILLING BITS
Published by Loosbrock Offshore
Mike Simmons, President
EARNINGS CUTS, THE OIL BUSINESS and HOW TO NEVER LOSE A LOT OF MONEY
The latest house to chime in with earnings revisions is Merrill Lynch.
Citing the flurry of storms that have tracked through the U.S. Gulf of
Mexico, ML cuts BJ Services, Smith International and Schlumberger.
The impact of the storms have cost companies more than 10 days of
revenue in the quarter while at the same time increasing their fixed
costs. Fixed costs are higher due to the added cost of transporting
workers on and off facilities and another associated storm
precautions.
ML says little of the extensive cost cutting measures, including
layoffs, ongoing in the oil patch will show up until the December
quarter and beyond.
The company still maintains that oil service shares "have seen their
bottom" as global oil markets are beginning to improve. They say the
underlying trend in inventory levels is favorable and the market is
overestimating availability of supply.
I am not convinced.
Investors are perplexed watching what appear to be "good" companies
with glowing revenue and earnings numbers continue to get trashed.
Every time the stocks register gains for a few days -- the sellers
come rushing in.
A wide variety of investment styles are touted. The most common lately
being "buy and hold for the long term". Long term? What is long term?
If you would have bought a few of these stocks 15 years ago, you might
easily be holding a loser in 1998. At best you haven't made more of a
return than you would have if you had stuck the money in U.S. Savings
Bonds.
Anyone have any reason to believe anything will be different in 2013?
I find that when people say something will happen in the future it
makes them more comfortable and makes them sound like more of an
"authority" if the future is way way out. The further the better.
After all, an expert is anyone that is more than 50 miles from home.
(He came so far, he MUST be smart!)
I have no more confidence that the oil service sector stocks will be
any higher in 15 years than they will in 15 days.
There are tons of ways to rationalize why oil prices will/should be
higher. Of course these same ideas would have been valid 15 years or
so ago when 1998 was a LONG-term objective. Well, it's 1998, so now
we have to look to 2013 for validation.
Don't get me wrong, there has been ample opportunity to make
tremendous returns in oil service stocks. But to blindly buy and hold
has not been the way. These stocks must be traded. They must be traded
in sync with the cycle. The boom bust cycle of the oil business.
If you are a shareholder of an oil service stock, you are IN the oil
business just as surely as if you were the head honcho at ABC
Drilling. You are personally exposed to the high risk and volatile
nature of the oil business.
You, as an investor, can not hide behind earnings estimates and
pundits rationalizations. You, just like the man in the business, have
to manage your investments with a firm grasp on the reality of boom
bust. You gotta know when to hold 'em and know when to fold 'em.
Don't feel alone if you can't or don't want to make these cycle calls.
And don't expect industry leaders to guide you. Management, for the
most part, isn't "playing" with their personal money. They manage the
business. For them to bow out of a market sector, or decrease
exposure, would result in less business to manage. Get the picture?
Since you ARE playing with personal money, you have to make the tough
calls.
I see far too many people get attached emotionally and personally to
"their" stocks. This is a huge mistake. The company doesn't know you
own it.
If I could ask you to do one simple thing during your stock investing
life, I would ask you to do this:
********Plan your trade and trade your plan.*******
Just doing this will save you tons of money and lots of stress.
PLAN how much you put at risk BEFORE you buy. PLAN how much profit you
expect BEFORE you buy. STICK to your plan as if you were instructed by
your employer to follow the plan to the letter or be fired. (Because
if you don't, you will eventually fire yourself.)
If you do this simple thing you can NEVER lose a lot of money on a
single trade. Would anyone make it a part of their plan that they
would allow a 30% loss? I hope not.
For more on how to plan your trades, the best teacher I know of is
Roger at the Rightline Split Report (free two week trial available)
Roger says to only risk two percent of your trading "pile" on any
single trade. If you have $100,000 you are investing/trading with, you
never let your loss on any single trade exceed $2000. So if you buy
2000 shares of a $10 stock, you sell the moment the stock goes to $9.
There will ALWAYS ALWAYS ALWAYS be another bus come by.
Ok, that's the sermon for today.
My oil sector light remains YELLOW. As low as the stocks are, they can
go lower. I see no fundamental changes to justify higher prices. These
stocks will not go back up like they did last year when they were
"fresh". Too many investors have found they aren't cut out for the oil
business. Sort of like participating in a cattle round-up...fun for a
while, but not the kind of living city boys can stomach day in and day
out.
Next report...from the streets of Oslo. (I hope.)
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