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: Tom L. French who wrote (3150)	11/19/1997 10:09:00 AM
From: pz	Respond to of 95453

Tom, I look at it as a case of supply and demand. The demand is very high for offshore rigs, especially deepwater rigs and there is a very small supply of rigs capable of this type of drilling. I look for dayrates to continue to climb, as I can see no reason for rates to stay the same or to pull back. I could be wrong on this, but I just don't see it slowing down. I personally don't see anything to that article in Barrons. It was just an excuse to take profits IMHO. Regards, Paul

To: Tom L. French who wrote (3150)	11/19/1997 1:48:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

Tom, <<Barron's says "with rig utilization around 95%... there's little opportunity for incremental revenue from new rigs... expected higher day rates next year are unlikely to compensate for lower revenue growth for new rigs.">> I think this is probably true, but until new rigs come on line (which coincidentally keeps demand for existing rigs high) we can look forward to higher day-rates, and since the costs associated with existing rigs are fixed incremental revenues from these rigs should drop straight to the bottome line. As far as I can see, the only thing that could bring this sector down is falling oil prices. A combination of sharply decreasing Asian demand and a very mild winter could do that, but even so, the effect would only be temporary. Until a significant number of new rigs come on line I think the entire sector will do well. Regards, Paul