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

To: ChanceIs who wrote (60070)	2/17/2006 9:43:16 PM
From: nrg_guru	Respond to of 206199

don't know the answer myself but curious as to thoughts as to how the following the land drillers this go around; NOT pounding the 'this time its different' table, but i think these factors have to come into play * cycle times (days from spud to td): have heard a few e&p's discuss how higher dayrates have been partially offset by shorter cycle times, with EP being the last one i can remember mentioning this at their analyst day meeting, off the top of my head; if rigs are more efficient and many of the new ones coming online should be because they are 'built to order' for specific play types, are dayrates more 'sticky' this go around? some of this HAS to be offset by less efficient crews at the margin, imo, but i'd also say co's generally are adding reserves organically through the drillbit much cheaper than in the m&a market, so doesn't m&a fall off before drilling and m&a still seems robust * unconventional plays - typically meaning more costly, but the nature and prevalence of these plays and importance to NA natty gas could help keep demand for drilling rigs more robust than in previous cycles; unconventional plays typicaly characterized by very steep initial declines then flatlining at much lower rates in fwd years...if you are an unconventional player and you want to show production growth, you have to keep poking holes in the ground, or the production tail stacking game ends; further unconventional gas is an NPV game and i'm curious if higher dayrates aren't somewhat offset by drilling quicker, meaning if you delay drilling does slowing down one of these plays hurt the NPV more than a higher dayrate? i'd have to model a well to figure out the economics. * term contracts - wasn't around last cycle, so someone smarter than I will have to answer, but were term contracts for land drillers as prevelant as now? NBR has 80+ and HP has ~60 newbuild rigs on order backed effectively in many instances by 3yr take-or-pay contract...producer would need to pay the NPV of the contract to walk away thanks in advance