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Gold/Mining/Energy : Ensco International Inc. (ESV) -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (782)	2/26/1998 1:10:00 AM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 2005

Gottfried, While not a drilling stock I bought a little TMAR today too. On drilling rigs contracts there are "standard terms", and general industry accepted practices written into the contracts. Technically, the rig company "pays for" moving the rig. But in reality every drilling contract that I have seen (except for the big turndown period in 1987-1989) always contains a "mobilization charge". That charge usually is sufficient to pay the out of pocket costs for the rig company to move the rig from Point A to Point B. At the point which the rig arrives on location and is positioned and commences preparation for drilling, if you as the lessee stop the work, then you must pay a "demobilization fee" to the rig company.thatis because the rig just does not just show up , set down anchors, and start drilling. They use global navigational systems,satellite-based, and usually ocean going tugboats to help position the rig precisely, and then to set the numerous anchorlines around all points of the compass so as to make sure that currents, winds, or waves do not move the drill rig once drilling commences.... The positioning process can take 24-36 hours to complete.... My guess is that companies will pare back capital budgets in the angeof 5-10% this year. However the cuts will not primarily come from the E&P side since your exploration program is the lifeblood of your company.... Also the impacts of the Asian crisis IMO are overrated in terms of impact upon E&P projects in Asia- some impact yes, but there are numerous ways contractually to get around a partner under a JOA or PSC who does not want to drill a well when you do.... Sincerely, Doug F.