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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Douglas V. Fant who wrote (47509)	7/7/1999 9:04:00 PM
From: Think4Yourself	Read Replies (1) \| Respond to of 95453

Some interesting comments about exploration budgets and rehiring... EDIT: Hey Mark C. - nyah-nyah! :-) Oil Producers Raise Goals By DAVID KOENIG AP Business Writer DALLAS (AP) -- With the price of oil flirting with $20 a barrel for the first time in 19 months, energy companies are beginning to spend more freely on exploration but are being cautious before reversing thousands of layoffs. As prices sank toward $10 a barrel late last year, the oil industry tightened its belt in a harsh retrenchment that slashed payrolls and cut budgets. In Texas alone, 14,200 jobs in the industry were eliminated since May 1998, according to state labor officials. Oil companies also sped up the pace of mergers in a push for efficiency and survival. The nearly doubling of prices in the past seven months, however, has prompted many producers to increase their budgets for exploration and production. But producers are waiting to see if prices stay put before resuming hiring. Michael Mayer, an analyst with Schroder & Co., said many jobs lost due to mergers will never be replaced. Fort Worth-based Cross Timbers Oil Co. is among those increasing development budgets in light of the recovery in oil prices. Spending plans for the year were raised from $60 million to a range of $70 million to $90 million, said chief financial officer Louis Baldwin. ''We have an inventory of projects that go out three or four years. With improved prices, we're going to execute more of those than we had planned this year,'' Baldwin said. Enron Oil & Gas Co. in Houston said that if cash flow improves, its exploration spending will be at the higher end of its budget range of $575 million to $650 million. Other small to medium producers, including The Coastal Corp. (NYSE:CGP - news) and Apache Corp. (NYSE:APA - news), both based in Houston, have also announced increases in capital spending, but the industry's giants have not gone along. ''The majors have almost decided that North America is a marginal area to spend their money,'' said Joseph Culp (NYSE:CFI - news), an analyst with A.G. Edwards. He said mergers such as Exxon (NYSE:XON - news)-Mobil and BP Amoco-Atlantic Richfield indicate that majors have planned for low oil prices and won't change their strategy now. Exxon Corp., which increased its exploration spending from $8.8 billion to $10 billion last year, has said it will not increase spending this year. Asked if the plans have changed with the rebound in oil, spokesman Ed Burwell said Wednesday that Exxon would have no further comment. Crude oil has been trading at 19-month highs on the New York Mercantile Exchange and briefly shot above $20 a barrel on Tuesday. In trading Wednesday, the contract for August delivery of light, sweet crude oil was little changed, dipping 1 cent to close at $19.77 a barrel. Prices sank to a 12-year low in December 1998, dropping as far as $10.65 a barrel on the Nymex, as markets were awash with oil and demand was reduced because of economic crises spreading from Asia. The recovery in oil prices has come as the Organization of the Petroleum Exporting Countries and other producers adopted substantial cuts in output and apparently stuck to them, and as Asian economies began to recover. Texas oil producers remain skeptical about the recovery in prices after a prolonged slump. Many worry openly about the central role of OPEC, which until recently has failed to enforce oil-output limits on members. ''I'm not going to rush out and drill a bunch of new wells this month,'' said Ted Collins, president of Collins and Ware Inc. of Midland, Texas, which operates more than 600 oil and natural gas wells. ''The OPEC countries have been pretty fickle, and it doesn't take much of a break in the ranks to crater this whole thing.'' Just this week, Obeid bin Sief al-Nasseri, the United Arab Emirates oil minister, warned fellow OPEC members not to ''exploit'' the higher oil prices by stepping up production. Exploration activity, meantime, remains far below levels of oil's hey-day. The industry had a record 4,530 drilling rigs in use nationwide in December 1981. That plunged to an all-time low of 498 in April before recovering somewhat to 580 last week, according to Baker Hughes, which has been keeping count of active oil-drilling rigs since 1944. ''We're not seeing any new drilling yet, and that's where the jobs are,'' said Morris Burns, executive vice president of the Permian Basin Petroleum Association in West Texas. In that part of the Oil Patch, most activity this summer has consisted of workovers -- resuming production in old wells. Burns said drilling probably won't resume in earnest until prices have stabilized at $20 or higher for six to 12 months. Many analysts, including Culp and Ken Miller of Houston energy consulting firm Purvin & Gertz, predict prices will settle in a range of $17-$20 a barrel.

To: Douglas V. Fant who wrote (47509)	7/7/1999 11:14:00 PM
From: BigBull	Read Replies (2) \| Respond to of 95453

Douglas, Texaco and Petrobras have signed a deal for 1.5 BILLION dollars worth of E&P in the Campos Basin. While $1.5 BILLION (spelled with a B) is not the whole world, it's still a very big pile of cash. BTW, care to hazzard a guess on whose rigs will get put to work? dailynews.yahoo.com Doesn't seem as though Texaco is waiting for y2k to get its rear in in gear. Perhaps this was already "budgeted" for, but it seems to me that that the biggies that do start to explore now, put their competitors at a distinct competitive disadvantage and almost force them to review their budgets. Whether they like or not. BTW now that the biggies are making all this upstream money, what will they do with it - increase the dividend? I don't know. It seems your company's "written in stone budget" was fairly pliable after all. Imo this bears watching.