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

To: Thean who wrote (10290)	2/1/1998 1:01:00 AM
From: Czechsinthemail	Respond to of 95453

Thean, Since you mentioned RIG, Transocean Offshore's website is now operational: deepwater.com It is worth checking out. It contains a wealth of information and provides a good primer on offshore and particularly deepwater drilling. If you take a look at their rigs and contracts, you will notice how long they extend. This is what gives RIG and the other deepwater drillers a very high earnings visibility and predictability regardless of whether oil prices go up or down on a particular day. They are so tightly supply constrained that rates should stay strong for some time to come. With the land drillers, it is a different ballgame. The short duration of their contracts means they can raise rates more frequently. That, plus being able to add rigs faster and cheaper, means they can benefit more dramatically from rising rates. But when drilling activity is cut back and/or more rigs come into service so that supply and demand come into balance, their rates can top out and come down faster. I think that is the main reason they have traded with more volatility and come down further from their highs. With oil prices relatively low, deepwater drillers are a safer play. But as oil prices rise and drilling activity heats up, the land drillers may outperform on the upside. The big uncertainties hanging over the land drillers are how many additional land rigs will be coming into the market and how many drilling projects delayed or cancelled. In some respects, the middle ground occupied by shallow water and deep jackup drillers like MDCO, GLM and ESV offers some interesting investment possibilities. With shorter contracts, they are faster to benefit from rising dayrates. The results have been faster earnings growth in reported 4Q results. Yet these companies trade at lower PE's than the deepwater drillers like RIG, FLC and DO. To some extent this is justified by the very strong long term growth prospects for the deepwater drilling companies. But if there is a continuation of strong drilling demand and tight supply in jackups, these offshore companies may match or even outperform the deepwater drillers. In any case, their lower PE provides some downside protection, and they should have better endurance than the land drillers. So far, the market has painted "drillers" with a very broad brushstroke that hasn't differentiated between companies very much. But savvy investors may start making distinctions between them based on their expectations of future drilling activity, risk tolerance and relative valuation. Good luck, Baird

To: Thean who wrote (10290)	2/1/1998 12:35:00 PM
From: HH	Read Replies (1) \| Respond to of 95453

Thanks Thean for your usual thorough work. If I could summarize, You would not be against being long , you would not be short yet you havent totally seen a definitive trend change. correct? As far as birds, I dont really keep track. There are some who try for the most but I past that some time ago. A typical day would start at 7:30 for a light breakfast and then a short ride to the feilds. We would shoot 2- 3 hours and then go to an area that had been prepared under some trees, A big grill was set with chicken, sausage, steaks, doves , pigeons. We would drink ourselves silly with Uruguayan wine as we ate the grilled food,(along with rice salad, tomatoes, bread) Then we would lay down on the soft grass in the cool shade for a couple of hours and sleep. At 3- 4 in the afternoon, we would start back shooting for another few hours. After that back to the estancia for shower and clean up and sip whiskey til dinner. HH