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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 (16530)	3/25/1998 6:22:00 PM
From: marc chatman	Read Replies (1) \| Respond to of 95453

I recall someone yesterday listed the debt equity ratios of the deep water drillers. I think RIG was at about 37%, but I don't recall the others. I have some recollection that MDCO had little or no debt. Of course, the terms of the debt arrangements would determine how susceptible the companies would be to changes in the interest rates. I probably should have researched it more, but I have no idea what type of rates they have locked in and for how long.

To: Broken_Clock who wrote (16530)	3/25/1998 8:16:00 PM
From: Czechsinthemail	Respond to of 95453

I think existing debt levels are likely to be interpreted on a company by company basis. For example, RIG has a fairly high debt level, but that debt reflects their building projects on new deepwater rigs for which they already have contracts that will fully pay off the cost of building. In a situation like this the leverage is probably a net benefit, because it so dramatically empowers the company's long term growth. For the land drillers there is more uncertainty around their prospects. They are more vulnerable to drilling cutbacks, and I think they are likely to be penalized for the greater risk until their is a higher confidence level that things will turn out well. Of course, if the reason interest rates are going up is because of a strengthening oil price environment, virtually all the drillers should be doing well. Then the concerns around debt levels will fade away and people will be clamoring after the growth prospects. Baird