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

To: Chuzzlewit who wrote (13769)	3/5/1998 2:28:00 PM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

Paul, I don't agree with Maat's analysis. From everything I can see, the economics of offshore drilling projects remains strong enough to support continued high utilization and dayrates. You are right that production demand is more critical than price, but if cash flows for the independent E&P companies fall, they will have less available to budget for drilling. I think they would love to drill more, but simply may not be able to afford it. I don't know how big the impact of this is likely to be on overall demand for rigs. If oil prices continue to fall, the impact on these companies will perhaps translate into weaker demand for land and shallow drilling projects simply because they won't be affordable and these projects are where the smaller E&P companies drill. I don't think the argument is that they will decide not to drill because drilling isn't profitable; more likely because it isn't affordable. Again, I think Maat is wrong in his forecast, but the Barron's article is so couched in "could be", "may be" that I took it as a negative spin on those maybe's that I simply don't think will play out in the real world. Hope this clarifies. Baird