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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Peter V who wrote (43048)4/22/1999 11:10:00 PM
From: Aggie  Read Replies (1) of 95453
 
Good evening to all,

I'm not too surprised to see rig rates going down. I believe this is a short term strategy on the part of contractors to make it through the next 2 quarters, in anticipation of an increase in activity at that time.

Think of the number of rigs which have recently come to the end of their contract. The contractor is faced with 2 choices: cold stack the rig (Cost: $300 - 500 K), warm stack the rig ($5 - 10 K /day), or bid the rig at slightly negative profit margins, keep the equipment warm, and, most importantly, keep the personnel.

I take this as a endorsement from the contractors that they believe the worst is over, relief is on the way.

Best of luck to all,

Aggie
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