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

To: Teddy who wrote (12337)	2/21/1998 6:56:00 PM
From: Czechsinthemail	Read Replies (2) \| Respond to of 95453

Teddy, Thanks for the link to the Worth article. It is really worthwhile reading to get a grasp of the industry fundamentals now and going forward. In addition to pointing out that 70% of the world's unproven reserves are offshore, I liked this part: Bob Gillon, a vice president at John S. Herold Co., a natural-resources research firm in Stamford, Connecticut, does the math: "So long as finding costs stay around $5 a barrel and production costs total another $5, then it is very clearly a profitable industry, even if oil is at $17." While extraction costs have fallen, most of the world's oil is being pumped from fields that are more than 30 years old. "Few people understand the rate at which current supplies are being depleted," says Tozzi. The Saudis and Kuwaitis still appear to have vast reserves, but Venezuela is depleting its proven reserves by 20 percent a year. Meanwhile, the older fields in the North Sea, most of them British, are shrinking 12 percent a year. "We're losing about 4 percent of our productive capacity each year through depletion," says Matthew Simmons, who heads his own investment firm in Houston. That means the industry needs to find an additional 4.8 million barrels a day of productive capacity to meet demand. If Venezuela is depleting its proven reserves at 20% a year, that cuts down the time they'll be able to cheat on their OPEC quota. Either that, or they'll have to do a whole lot of drilling to replace those reserves. Baird