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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (2337)	10/2/2001 7:11:21 PM
From: russwinter	Read Replies (4) \| Respond to of 36161

These are all incredible reads on the energy industry by Matthew Simmons: simmonsco-intl.com. Another example (of many) of how capital misallocation (in this case underinvestment) leads to supply problems. I was especially intrigued with his two presentations here entitled: The Drilling Industry's 21st Century Challenges, and The Energy Crisis- The important role which the offshore drilling industry must play. Summarizing a few points: Simmons feels offshore is where meaningful energy must be found in the next decade. The current offshore rig inventory is ancient, and is generally fully utilized. Only 50 new rigs were added between 1994-1999. The other 450 were brought on stream during the last great oil boom in 1975-1981. Only 13 mobile rigs were constructed in 2000 (a big year), and 7 this year. Simmons estimated that to meet this decade's energy demands, another 450 offshore rigs will be needed PLUS whatever is required to replace the old timers. Apparently an offshore rig typically runs about $300 million. Do you (or others)have any recent new mobile rig data for this year and what's on the boards for next year? Help me with a quick shortcut toward some investment prospects. Who are the major players in the manufacture of offshore rigs, and the major subcontractors and parts suppliers? Of the existing offshore contract drillers, how does the rig age profile break out? Is there anybody with newer, more technically modern equipment? Who is the most aggressive at preparing for the next cycle? Who are the "slumlords" that are most likely to dwindle versus who maintains good R&D and strong capital budgets (plant modernization among the suppliers). Any good non-US names? Is the industry fragmented, or is there a "Boeing-like" provider? Anybody flush with capital? Anybody low, but has valuable assets? The other point that really stood out In the Simmons work is the fast production decline of natural gas wells (typically 40% within the first year, often 80% falloffs within three): see: High costs and falling gas prices-implications for E&P economics.