Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (19310)	5/28/2005 3:03:40 AM
From: Wharf Rat	Respond to of 361252

Oil-recovery costs soar Equipment, labor expenses up 43% from last year By Joe Carroll Bloomberg News Major oil companies including Chevron Corp., BP Plc and Royal Dutch/Shell Group are spending more than ever for workers and equipment as surging energy consumption increases demand for geologists, drilling rigs and pipe. Finding and pumping a barrel of oil - including labor, equipment and seismic testing - cost a record $17.12 last year, up 43 percent from a year earlier, data compiled by Bloomberg show. For example: A rig that can drill in mile-deep water cost an average of $183,217 a day to operate in the first quarter, up from $127,990 the year before, according to Houston consultant ODS-Petrodata. The expense has helped push petroleum prices higher through 2011, the furthest out that contracts for future deliveries trade on the New York Mercantile Exchange. While prices have fallen 12 percent from their all-time high, oil-futures prices for the next five years are more than double the 1990s average of $19.69. "The costs of bringing new barrels on line are much higher than they once were," said David Anderson, a portfolio manager at Palo Alto Investors LLC. "You need oil probably to average $40 a barrel or better" to foster the investment needed to keep production rising in step with demand, the former Chevron accountant said. "Costs have gone up, but frankly, they haven't gone up as rapidly as the prices we're receiving for what we produce," said Mark Hellerstein, chief executive of St. Mary Land & Exploration Co., a Denver oil company. "The worry is that you're investing in long-term assets based on today's prices, and if those prices fall at some point down the road, your project is at risk of not paying off," Hellerstein said. For Hellerstein, whose company pumps oil in Texas, Louisiana, Arkansas and the Rocky Mountains, the cost of lining new wells with piping has jumped 20 percent as steel prices rose. Drill bits also cost more, rig leases are at a record high and labor costs have soared, he said. St. Mary reported May 3 that first-quarter results were a record. Net income rose almost 64 percent to $35.1 million from $21.4 million the year before, the company said in a statement. denverpost.com