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

To: Bazmataz who wrote (10384)	2/2/1998 6:59:00 PM
From: Lucretius	Read Replies (1) \| Respond to of 95453

Murphy is E&P not oil service. They are obviously affected by lower crude prices. Are you just now realizing this or what?

To: Bazmataz who wrote (10384)	2/2/1998 8:24:00 PM
From: Teddy	Respond to of 95453

Barry, you seem to be a little confused. My knowledge of the Oil Industry is pretty limited, but please allow me to share the little that I have. I don't know what companies that you have invested in, but on thread we are mainly concerned with Drillers and Oil Field Service companies. That is why the thread is named "Strictly: Drilling and oil-field services." As I hope you are aware, are major part of Murphy Oil's business is finding and selling oil. Companies that do that are in a sector known as Exploration and Production (E&P). They lease drilling rigs and buy equipment and services from the companies that we discuss in this thread. E&P companies' earnings are directly related to the price of oil/gas. When the price goes down, their earnings (generally) go down. Drillers earnings are not directly related to the price of oil. They earn money by leasing rigs to E&P companies. The rate they charge is related to the supply and demand of rigs. The supply of Deep Water Rigs is pretty much fixed, because it takes years and millions of dollars to build a new rig. The demand for them is very high and (if we can believe the CEOs of drilling companies, E&P companies and analyst), that demand will remain high unless the price of oil goes below $15/barrel for 6 months (There are numerous articles posted on this thread to support this). To illustrate this fact, let's look at a press release from Murphy Oil from today: biz.yahoo.com Here is a selection (bold added by me): "...Highlights of the review of operations during the conference call follow: Exploration and Production Wells are currently drilling in the Gulf of Mexico at Vermilion Block 130 (75%) and onshore Louisiana in the N.E. Wright field (50%). In Bohai Bay, China, Block 04/36 (45%), a well in a separate structure from the discovery well (the H-3 prospect) has spudded and results should be available during the first quarter. Upcoming wells in the deeper waters of the Gulf of Mexico include Garden Banks Block 237 (Pimento, 34%), which should spud in early February, and Ewing Bank Block 994 (Boomslang, 75%), Garden Banks Block 168 (Wadden Zee, 33%) and Garden Banks Block 341 (Habanero, 45%), all commencing in the second quarter/early third quarter time frame. Drilling in the North Falklands Basin (25%) is scheduled for mid-1998. The exploratory program on the Gulf of Mexico shelf will remain active. In the second quarter, a deep gas prospect at East Cameron Block 38 (29%) and a well at South Marsh Island Block 261 (37.5%) will commence drilling. By the first week of February, a well at Eugene Island Block 29 (30%), should spud. Through farmouts to industry partners, Murphy's interest in the latter two wells will be carried to casing point...." As you can see, drilling activity does not stop and start as a result of daily fluctuations in oil prices. I hope that you now have a better understanding of whatever you invested in. Best wishes.