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

To: dfloydr who wrote (80673)	12/4/2000 8:17:09 AM
From: Tomas	Read Replies (1) \| Respond to of 95453

Oil service execs offer bullish outlook despite political cloud Houston Business Journal, December 4 Monica Perin The oilfield services industry is enjoying strong growth, and industry leaders see the boom continuing well into the future -- regardless who becomes president in January. Even if the prices of oil and natural gas -- which are currently at unprecedented highs -- come down as much as 30 percent, the industry will still be in good shape, Paul Bragg, president and CEO of Houston-based drilling company Pride International said this week at the annual Arthur Andersen Energy Symposium. Conditions in the services industry have "improved dramatically across the board" since 1998, when crude oil prices plummeted to as low as $10 a barrel and natural gas sold for less than $2.00 Those prices began rebounding in 1999, and the oilfield services industry -- which typically lags 12 to 18 months behind -- began seeing a strong upturn this year. "As long as high commodity prices don't cause a premature decrease in demand, there will be good ongoing growth in the industry," Bragg predicted. Douglas Rock, chairman and CEO of Houston-based Smith International, an oilfield services and equipment company, sees steady growth of 4 percent to 5 percent in the rig count next year, especially in deepwater exploration and production areas. The number of deepwater rigs in service this year -- 120 -- is double the number that were operating in 1997, although the total worldwide rig count is not quite back to where it was in 1997, according to data presented by Bragg. The total number of rigs in 1997 was 2,224 and today is 2,135. That compares to 4,000 drilling rigs in the early 1980s. But a much higher percentage of today's rigs -- 80 percent -- are drilling for natural gas, Rock said. "This market is being driven by demand for natural gas to generate power," he says. Predicting a "strong uptick" in oilfield services, Rock said there is "not enough equipment available. We are always looking for equipment to buy and upgrade and relocate." Demand for drilling and drilling equipment is also being driven in part by restrictions against drilling in new reserves like the Alaskan Natural Wildlife Reserve. The longer drilling in such huge new fields is put off, Rock said, the more drilling is needed to produce difficult-to-reach gas from old fields. Also bullish on the industry is Ben Guill, president of First Reserve Corp., a private equity firm in Houston that invests in small to mid-sized oilfield services and equipment and some exploration and production companies on a buy-and-build basis. "We're definitely bullish," Guill said. "Now is a good time to invest in the equipment sector," he said, because companies haven't really begun to spend yet in response to high commodity prices. But, he noted, orders for capital equipment are going up. "This is a demand-driven market." bizjournals.com