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

To: Think4Yourself who wrote (83624)	1/6/2001 11:31:08 AM
From: Big Dog	Read Replies (1) \| Respond to of 95453

New rig construction will only occur when the drillers figure out a way to announce they are building rigs without hurting their stock. In the last few years I have seen so many 'business' decisions made based on not what is 'good business', but what will the street think. It's a pity. The rare exception is Rowan. Bob Palmer does what he thinks is best. Period. He says "if you don't like our stock, short it." I sure would like to see other companies follow that path. Drillers love to build rigs. They love to own new rigs. These days they are financially capable, but are mostly restrained by 'the street'. The analysts should draw a pay check from these companies since they are really the ones making the decsions... I heard today that the pilot program by a major US company to establish a rig futures/derivitives market has been terminated this week. I was really hoping this would work... The leader of the initiative may surface with another firm and continue the work, but it's doubtful. Recall Matt Simmons' words from a few years ago (and repeated in the Offshore Drilling Bits interview of May 1999) that the industry needs hundreds of new offshore rigs to replace the existing fleet (average age about 20+ years) and to provide extra drilling capacity to compensate for increased demand and decreasing supply (and accelerating depletion). Oil company's have their collective heads in the sand on this issue, in my opinion. Without a viable drilling rig fleet, oil company's go out of business - plain and simple. They can not stay in business without rigs. But they view the drillers as the greedy enemy while they continue to try and shift risk to the much less capitalized drilling contractor. Oil companies would never do business if they had to live with the rate of return that drillers generate. There needs to be some partnership between oil companies and drillers and the risks of the business needs to be more fairly distributed. Oil companies once tried owning rigs...that failed. (Although there are a handful of co-owning deals that exist now.) Oil companies do not make good drillers. The industry, I think, is on the verge of an economic transformation - by necessity, not by mutual desire. What the 'color' of that transformation will be, I don't know - but I try every day to be the one who creates it (and I have a few ideas). As through history, necessity is many times the Mother of Invention, and I predict that will be the case of the new relationship between oil company and driller. Otherwise, the system stops working. Rigs simply will not last forever and without rigs, oil companies are out of business...even OPEC. Oil rigs, not the computer or internet, will turn out to be the most important tool of the first quarter of the 21st Century. Without them, the world grinds to a halt. I am working on some very cool projects for the industry ...trying to get them organized and off the ground. Pipe dreams, sure. But I'm a Wild Dog that doesn't mind dreaming and trying. Rigs WILL be built. But I don't think we will see them built in a traditional manner, ie. ordered by a drilling contractor as Santa Fe is doing. I'm not sure how the new fleet ownership and equity/financing will be structured, but look for it to transition into something different from the past. So sayeth The Dog. big