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

To: RealMuLan who wrote (16754)	3/26/1998 7:03:00 PM
From: Ken Robbins	Respond to of 95453

What I heard the guest on CNBC say was that day rates were 70% of the level needed to spur a round of new rig building - or words to that effect.

To: RealMuLan who wrote (16754)	3/26/1998 9:15:00 PM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

Some companies will miss earnings. The most likely ones will be those most closely tied to land drilling and vulnerable to cutbacks in land drilling activity. In addition to the land drillers themselves, this might also include some of the service companies doing a lot of land drilling business. I doubt if any of the offshore drillers will miss by more than a couple of pennies and many will likely provide upside surprises. Generally, I think the offshore drillers are a safer bet going into the earnings season, and among these the deep drillers are the safest. Though I seriously doubt we'll see any serious misses among any of the offshore drillers, I think the likelihood of misses among those heavily involved in shallow barge or platform drilling, land drilling and/or other service businesses is greater. I think the day rate figure you are alluding to is the replacement cost dayrate, which I understand to be the level of dayrates that would generate significant levels of new rig construction. In that sense, being at 70% of that level acts as a deterrent to major building programs and extends the capacity constraints and the longevity of the drilling cycle. Baird