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

To: Brad Baker who wrote (49848)	8/25/1999 6:09:00 PM
From: Douglas V. Fant	Respond to of 95453

Brad, Yes- see the "Oil & Gas Reporter" Section- 14 pages long from last Sunday's Midland Reporter- Telegram. This week's O & G Section was entitled "The State of the Oilfield Services Industry" The section is packed with articles and interviews of numerous OS executives from Schlumberger down to owners of acidizing companies, and it's packed with numerous facts about the current state of affairs of each specific sector of the OS industry. The universal complaint was things are ramping up rapidly now and that all of these companies laid off 40% of their workforces in the 1997-98 depression, and now cannot get more experienced people to come back and work in the oilfield services industry. So two things must happen. The average pay rates of $15/hour for OS workers in North America must rise. Second the rates charges by OS compnies must also rise. The average profit margin for onshore drillers currently is about $1,000/day over its dayrate. During the last upswing that profit margin was in the $2,700/day area. Or in percentage terms, the profit margins for onshore rigs shrunk to about 40% of their previous range. My guess is that that will change shortly, and that profit margins for OS compnies will begin to rise- and pretty rapidly too. What proof do I have? Well just my first anecdotal proof to be sure. Yesterday I got a call from "Drilling Company X". They said "Hey you'll be finished with our Rig # so and so I about 3-4 weeks. Do you want it afterwards? Speak up now since we can't guarantee its availability after that date..." Wow- I haven't had a phone call like that from a Drilling Company person in two years. So at least onshore things are definitely heating up for the OS companies....