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.

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

To: Chuzzlewit who wrote (2703)	11/4/1997 1:39:00 PM
From: Czechsinthemail	Read Replies (2) \| Respond to of 95453

day rates are still not high enough to support the construction of new rigs. Apparently, much of the current constuction is being undertaken to replace aging existing rigs. So as day rates continue to increase I expect an explosion of new construction. Therefore, if I'm reading this correctly, the capacity of the drillers is limited by the number of rigs. Construction seems to be running full out. You are right that some of this activity merely serves to replace older units of an aging fleet. There is also a significant amount of upgrading and conversion work that companies like NE are undertaking. Bottom line is that there is no fast way to increase the rig fleet, especially for the premium deep water and harsh environment rigs. Since all the companies will run as long as this undercapacity situation continues, I'm placing my long term bets on the deep water and harsh environment drillers. They should show the best improvements in dayrates and the longest run before hitting supply/demand equilibrium. My biggest positions are NE and SDC. I expect companies like VRC to do well, but I expect the supply/demand balance to arrive here sooner than with the drillers. Good luck to you, Baird