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

To: upanddown who wrote (11962)	2/17/1998 11:38:00 PM
From: RGinPG	Respond to of 95453

I guess the thing is that the earnings estimates for the Land drillers are percieved to be overestimated in light of falling rates. Reminiscent of the disk drive makers. They had the best valuations in the entire market, only to have their earnings cut in half!

To: upanddown who wrote (11962)	2/18/1998 1:49:00 AM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

John, The big concern around forward earnings estimates is whether or not they are reliable. The estimates formulated using optimistic assumptions about oil prices, high dayrates and high demand for drilling rigs would likely favor higher growth for the land drillers. If demand picks up, the land drillers are likely to show the best performance both because they have shorter contracts and can reflect the rising dayrates faster and because they can add rigs more quickly and cheaply than offshore drillers. But when demand begins to slacken, the land drillers will be the first to feel it. That seems to be the situation we are in currently. There seem to be signs of some inactive land rigs and perhaps some cuts in dayrates. Not only is there likely to be a more advantageous relationship between limited supply and the demand for offshore rigs, there are also benefits from longer contract terms, particularly for the deep offshore drillers. You can read a more extended discussion on this at the RIG thread: 207.183.153.23 good luck, Baird