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

To: William E Hodal who wrote (14841)	3/14/1998 5:31:00 PM
From: Teddy	Respond to of 95453

Hi William, welcome to the thread. I don't know if you noticed, but the article you posted is over one month old. It was discussed here at length on the day it was released. One short week after Amoco was crying for lower Dayrates, they signed a one year extention on a contract that still had a year remaining. That brings us to February 2000. The Wall Street Journal -- February 19, 1998 Transocean Offshore Contract HOUSTON -- Transocean Offshore Inc. said it extended a contract with an Amoco Corp. unit under which Amoco leases one of Transocean's "ultra-deepwater" drillships, the Discoverer 534. Transocean, an energy-services company, said it expects the one-year extension to begin next February. Transocean expects the extension to yield revenue of about $74.8 million. The company said the drillship, which can work in water as deep as 7,800 feet, currently operates in the Gulf of Mexico. As you should know, there are more rigs working in the GoM today then there was when the article you posted was written. There has been no weakening in dayrates.

To: William E Hodal who wrote (14841)	3/14/1998 5:43:00 PM
From: Teddy	Read Replies (2) \| Respond to of 95453

William, it has been so long since i read that article that i forgot the second part. Did you read it? Here are a few snips: ... But oil-field equipment and supply companies contend the high rates are justified. They're the classic outcome of a market in which demand is outstripping supply, they say. "We deal with people every day who profess sticker shock," said Russell Luigs, chairman and chief executive officer at Global Marine, a Houston offshore drilling contractor. "Have we had people try to negotiate an existing rate down? No. What we would simply say is, if you don't wish to continue to use the rig, then we'll go ahead and market the rig elsewhere. What has happened in the last few months, is that the world has run out of surplus rig capacity, at least offshore." ... "You can't continue doing business at $3,500 a day," said Ken Tamblyn, chief financial officer at Tidewater, quoting what was the average daily rental rate for a supply boat two years ago. Today New Orleans-based Tidewater, the leading contractor of marine supply vessels in the Gulf of Mexico, is renting its supply boats at an average rate of $8,500 per day. "We haven't lost any jobs" because of rate increases, said Tamblyn, who noted that they are a product of the current supply-demand situation. "Our customers seem to understand that the industry needed higher day rates in order to make this business make sense for the longer term." ...two years ago, jack-up rigs capable of drilling in shallow water commanded rates between $12,000 and $15,000 per day. Floating semisubmersible rigs able to drill in deeper waters went for between $40,000 and $50,000 per day. And the most advanced deepwater drilling rigs commanded about $70,000 per day. "Today the $70,000 is $210,000; the $40,000 is $160,000; and the $12,000 is now $75,000," Simmons said. "If you didn't know anything, you'd say that's unfair," he said. But the reality, he notes, is that oil companies desperately need the rigs to keep oil and gas production -- and income -- flowing. Last year, "we used every rig in the world ... onshore and offshore."