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To: Timelord who wrote (8976)	6/16/1999 7:15:00 AM
From: Thean	Respond to of 14427

Alex, RIG received an upgrade yesterday together with some other drillers. Near term RIG and other drillers will maintain their price as long as oil maintains its price. But it is hard for me to see oil price breaking through $20 and stay up there in the next 6 months. Oil is now $18.60 and has $2 to go if the summer driving season is strong. OSX breaking new ground and being a commodity play is also helping them. A real breakout will come if major oil e&p budget is revised upward in another 3-4 months. With the BP-Amoco and Exxon-Mobil merger I doubt we will see net positive increase for next year. What it means is the pot of money to be distributed to all the service contracters will not increase and only forward speculation drives the driller higher. This is not as good a healthy sign as when the dayrate, utilization all hit top gear back 2 years ago. Meantimes, I would hold and maybe take profit soon in RIG and switch into others. But if you have held RIG long enough for possible LT tax treatment that would take precedent in consideration of course. Until long term dayrate for the deepwater firms up and RIG can take advantage, the deepwaters are going to be laggards to the swallow water and land. The problem is the swallow and land drillers are no longer cheap. But one can think of it this way - more downside risk if oil price falls, more or less similar upside potential if oil maintains and trades higher. If you want to take some greater risk, MRL has been beaten down "unfairly", PKD has been stuck at $3 while its land peers have shot up, FGI has been a real laggard as they are perceived to be the last on the food chain to benefit from this early cycle, if we can call this early cycle.