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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (27016)	11/10/2003 10:48:15 PM
From: DELT1970	Respond to of 206101

Post-conference comments from Merrill Lynch: "Merrill Lynch's Global Energy Conference concluded recently following presentations by 34 leading energy companies, including 15 E&P (exploration and production) companies, 13 oil services and drilling companies and six integrateds. The potential for accelerating upstream spending growth near term appears limited, as E&P companies continue to deemphasize spending free cash flow on increased capital spending while continuing to favor debt reduction, share repurchase and other uses of free cash. The direction of drilling activity this winter in North America hinges on natural gas storage and pricing trends. Winter weather will be a key factor. Land drillers are confident rig activity will trend higher in North America, but margin growth will be slow due to over 200 rigs in the readily available supply. Modest improvement in drilling activity outside North America is anticipated, particularly in Latin America, the Middle East, West Africa, Russia and the Caspian. Larger service companies, with diverse global presence, appear best positioned to grow given that spending is increasing most in areas such as Russia, the Caspian, the Middle East and Mexico. The larger service companies tend to benefit disproportionately in these markets, given their integrated service capabilities. Monetization of stranded gas was a common theme, with increased LNG (liquefied natural gas) imports in North America a repeated topic. However, most do not expect volumes to increase meaningfully for several years. Incremental gas supplies from onshore sources in North America and the Gulf of Mexico will be the primary sources for many more years. Offshore fundamentals remain mixed, with overcapacity of deepwater equipment, especially drillships, and a relatively balanced global jackup market. Up to 25 additional jackups are expected to leave the GOM (Gulf of Mexico) for Mexico, West Africa, Trinidad and India. Achieving pricing improvement for most services remains challenging, with the exception of land rigs, jackup rigs, pressure pumping, drill bits and selected other value-added products and services. However, service prices remain relatively low, so that pricing is not an impediment to demand. The industry generally has too much spare capacity, particularly in North America, and additional consolidation is required to improve efficiency and profitability."