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

To: Broken_Clock who wrote (14420)	3/11/1998 7:53:00 AM
From: marc chatman	Read Replies (2) \| Respond to of 95453

I've been trying to think this thing through, and it seems to me that the falling oil price is a double edged sword. Many or even most people seem to concede that if oil prices stay low for a significant length of time, oil producers will reduce their E&P budgets. On the other hand, lower oil prices could stimulate demand and consumption (according to Charles Maxwell, at least). The increased consumption should lower stocks and prompt oil producers to increase E&P in order to compensate. This leads my to believe that the larger producers, which can absorb the ongoing E&P costs even in a lower price environment, will continue to drill, and their threats of reducing E&P budgets are simply a negotiating tool. Smaller producers, which may not be able to absorb E&P costs if it means operating at a loss, are more likely to slow or cease their exploration and drilling. Perhaps I'm way off target here, but isn't this what we are starting to see? If so, which (if any) of the drillers discussed on this thread are most exposed to the small producers?