Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: upanddown who wrote (48680)	7/31/1999 10:07:00 AM
From: Aggie	Respond to of 95453

John, Good Morning, These small E&P's may be good stock plays at this point in history, and that may be what is driving this strong interest - a near term pop with good returns. I favor the long-term stock approach, so I tend to be a bit more circumspect. When I see the depths of (for example) Miller's Hosston wells, and compare it to their producing rate - well, I find it hard to see how they can pay out in a reasonable amount of time. It may be that I have my "overseas" cap on - we generally require healthy production rates to declare commerciality - but the price of gas isn't that high (yet) and wells haven't become that cheap to drill (yet). Rig demand does have a seasonal aspect to it, but that is already figured into the stock prices. As for the big boys - well.....sometimes I think their egos get the better of them. It's all very well to carry out mergers and so forth, but the historical record would suggest that most of them fail to meet their objectives of realizing cost savings and synergies - and by most, I mean more than 70%. This was highlighted in a recent WSJ article. All of us would like to discover an elephant. I have worked on a few of them, from grannies like the East Texas Field to one of the multi billion barrel fields in the FSU. At the end of the day, you keep any property where you can turn a reasonable buck. Again, I think it's ego talking. Every country I've ever worked in, all of the majors produce from and pursue prospects which are attractive, but not necessarily expected to be elephants. AS far a water depth goes - yes, the majority of the unexplored or under-explored regions do lie in deep water, but bear in mind that it's a big planet. One of the biggest gas discoveries of last year (17 tcf) was in the far east, in about 100 - 200' of water. And now, Parker has just moved their AKIOC barge onto location in the Caspian, to drill a wildcat on an enormous, untested structure - in about 15' of water. From my years in Kazakhstan, I can tell you that the Soviets, using rudimentary seismic, would drill the tops of the big structures, test the well (if it didn't blow out first), then move on. There are many, many areas left to explore, and the development of better exploration tools will open more with time. But, to answer your question - without a doubt, the uncharted regions are in deep water, and therefore towards floaters. My opinion is that the mega-drillship will replace the semi as the deepwater choice, because of their enormous operational flexibility. And don't forget - because of the challenges inherent with great water depths, costs will be high, so these discoveries will have to be elephants, just to pay out. Regards and Good Luck, Aggie

To: upanddown who wrote (48680)	7/31/1999 10:07:00 AM
From: Aggie	Respond to of 95453

John, Good Morning, These small E&P's may be good stock plays at this point in history, and that may be what is driving this strong interest - a near term pop with good returns. I favor the long-term stock approach, so I tend to be a bit more circumspect. When I see the depths of (for example) Miller's Hosston wells, and compare it to their producing rate - well, I find it hard to see how they can pay out in a reasonable amount of time. It may be that I have my "overseas" cap on - we generally require healthy production rates to declare commerciality - but the price of gas isn't that high (yet) and wells haven't become that cheap to drill (yet). Rig demand does have a seasonal aspect to it, but that is already figured into the stock prices. As for the big boys - well.....sometimes I think their egos get the better of them. It's all very well to carry out mergers and so forth, but the historical record would suggest that most of them fail to meet their objectives of realizing cost savings and synergies - and by most, I mean more than 70%. This was highlighted in a recent WSJ article. All of us would like to discover an elephant. I have worked on a few of them, from grannies like the East Texas Field to one of the multi billion barrel fields in the FSU. At the end of the day, you keep any property where you can turn a reasonable buck. Again, I think it's ego talking. Every country I've ever worked in, all of the majors produce from and pursue prospects which are attractive, but not necessarily expected to be elephants. AS far a water depth goes - yes, the majority of the unexplored or under-explored regions do lie in deep water, but bear in mind that it's a big planet. One of the biggest gas discoveries of last year (17 tcf) was in the far east, in about 100 - 200' of water. And now, Parker has just moved their AKIOC barge onto location in the Caspian, to drill a wildcat on an enormous, untested structure - in about 15' of water. From my years in Kazakhstan, I can tell you that the Soviets, using rudimentary seismic, would drill the tops of the big structures, test the well (if it didn't blow out first), then move on. There are many, many areas left to explore, and the development of better exploration tools will open more with time. But, to answer your question - without a doubt, the majority of the uncharted regions are in deep water, and therefore in the realm of floaters. My opinion is that the mega-drillship will replace the semi as the deepwater choice, because of their enormous operational flexibility. And don't forget - because of the challenges inherent with great water depths, costs will be high, so these discoveries will almost have to be elephants, just to pay out. Regards and Good Luck, Aggie