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

To: upanddown who wrote (15081)	3/17/1998 2:17:00 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 95453

John, I may be off base here, but i think the increase in day rates has been the fuel for drillers higher stock prices. Remeber, they aren't building new rigs yet(to any great extent). New rigs = more $ of income, but they haven't reached the point where new rigs are cost effect, rate wise. They have simply refurbed some existing inventory to make up for the deep drilling demand. RDC is really out on a limb if things don't turn around by next year. Those gorillas will eat them. I expext tho, that next year will be better. By then, half the oil producers will be bankrupt and dealing with in house revolutions.... PK

To: upanddown who wrote (15081)	3/17/1998 3:03:00 PM
From: Czechsinthemail	Respond to of 95453

John, Drillers increase their earnings by increasing dayrates and/or by increasing the size of their fleet. With the exception of some deepwater and harsh environment rig building, there isn't much in terms of new fleet additions. That means rising dayrates. If you look over the information from the Global Marine 10-K that I posted, you will see that utilization and dayrates remain high and may be increasing in some areas such as the North Sea. Even as they begin to flatten, companies will continue to show higher average dayrates as rigs contracted at lower rates rollover at higher rates. The amount of this lagging increase will be greater for companies with longer contract terms--like RIG and other deepwater drillers. The important thing to remember is that in an environment with 100% utilization, producers will have to big up dayrates to get rigs because of the capacity limitations. Hope this helps, Baird