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

To: Tulvio Durand who wrote (13771)	3/5/1998 1:43:00 PM
From: Big Dog	Respond to of 95453

If day rates fell 15%, the rigs are still working. They still need to be maintained, upgraded, refurbished, etc. The fleet is getting old. Takes some work now and then to keep these old fellas in good order. I think FGII is insulated from day rate declines, if/when/should they occur. And again, FGII has a huge and growing backlog of FIRM work.

To: Tulvio Durand who wrote (13771)	3/5/1998 1:46:00 PM
From: Lucretius	Respond to of 95453

Dayrates for drillers is supply/demand driven. as FGII pumps out more rigs, the drillers' business will begin to suffer once rates equal replacement costs and it is profitable to build speculative rigs because dayrates will stop rising. Earnings may coninue to grow thru new-builds, but PE's will contract on the drillers as much of their upside is then capped and dependent on new-builds which further hurt the supply and demand situation everytime one is built. FGII's cycle will last longer than the drilling cycle. Likewise, it began later than the drillers.