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

To: AltLar who wrote (51242)	9/16/1999 12:02:00 AM
From: IndioBlues	Respond to of 95453

Houston Chronicle article re Oil Field Service Cos. Oil-Field Service Companies Show Some Signs of Recovery Sep. 15 (Houston Chronicle/KRTBN)--Oil-well service companies offered some signs of recovery Tuesday, but there also were some strong indications that $23-a-barrel oil doesn't mean a quick comeback for everyone. Signs of recovery in the oil-field services sector were reported at the Dain Rauscher Wessels energy conference here, along with indications that some companies still haven't seen the upturn. On the plus side, two drilling service companies -- Nabors Industries and Key Energy Services -- both said they are hiring because demand is beginning to pick up. However, Baker Hughes, one of the biggest companies in the business, warned that its third-quarter earnings will fall short of the levels expected by analysts. And, the best sign that Halliburton could offer was bigger-than-expected savings from its acquisition of Dresser Industries. Nabors, the largest owner of land-based drilling rigs, reported it has hired 1,250 workers since April and plans to hire 1,000 more. More workers are needed because the percentage of its drilling rig fleet in use since then has increased from 30 percent to 33 percent. The day rate to rent these rigs has started to go up slightly, said Chairman and Chief Executive Eugene Isenberg at the conference. Key Energy Services, the largest onshore well service and workover company, also reported that it is hiring. The company is based in New Jersey but has offices in Midland. When oil prices reached $18 a barrel, demand started coming back from owners of stripper wells, who hire the company to do work to stimulate production in older fields, said Francis John, Key's chief executive officer. The crude price doesn't need to stay in the $24-plus range that it reached Monday, he said. "If it stays in the neighborhood of $16 to $17 we will do fine," he said. This type of business is relatively quick to come back when prices increase, he said. However, Baker Hughes, whose weekly reporting on drilling rig activity has shown a steady increase, said the upturn in activity has been confined to the Western Hemisphere. It warned that the rig count in the Eastern Hemisphere is still declining. And the worldwide offshore drilling business has yet to hit bottom, said Chairman and Chief Executive Max Lukens. The biggest exploration increase has been in onshore natural gas wells, mostly in the shallow 5,000- to 10,000-foot depth range, but these offer relatively small earnings prospects for service companies. These are "easy pickings" compared with the deeper wells, Lukens said. The Baker Hughes rig count was 690 Friday, up from 671 a week earlier, but still lagged well below the 781 of a year earlier. Because international business is still down, Baker Hughes expects its third-quarter earnings to slip to 3 to 4 cents per share, down from the First Call prediction of 6 cents. Baker Hughes stock declined 2] Tuesday to 31 3/4. Dallas-based Halliburton is "coming out of the trough" but has yet to started hiring, said spokesman Guy Marcus. It could have to cut another 1,500 employees but decided to keep them on the payroll, anticipating the upturn. Halliburton now calculates that the cost savings from its acquisition last year of Dresser Industries will be about $500 million a year, double what was earlier predicted. On the exploration and production side, Anadarko Petroleum said Tuesday that cash flow this year should be up 35 percent as the result of higher oil and gas prices. It also will experience higher production. By Nelson Antosh

To: AltLar who wrote (51242)	9/16/1999 3:02:00 AM
From: dfloydr	Read Replies (1) \| Respond to of 95453

Two items to add to the FGI discussion: I have not seen it mentioned elsewhere: OCR on the Oslo exchange went from NKr. 1.40 to NKr.2.00 on the day it was announced that FGI and OCR are headed for arbitration over the two delayed OCR rigs being built by FGI. I am wondering how new rigs will get financed given the cavalier way in which the big oil companies turned their backs on signed contracts this past year. I for one would not be willing to be a lender ... not unless some of the drillers prevail big time in court and soon. It will take a lot more juice to get lenders to play when the contracts that seem to justify the construction of a new rig can be ignored unilaterally.