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

To: Lazlo Pierce who wrote (19092)	4/15/1998 6:32:00 AM
From: Teddy	Read Replies (1) \| Respond to of 95453

A few snips from my pal Mavis' excellent article: "... The latest Offshore Rig Locator, which tracks rigs and day-rate contracts, shows a $2,000 drop in the bottom range for both the 250 feet and the 300 feet class of jackup rigs in the Gulf of Mexico. In March, the day-rate range for 250 feet jackups was $34,000 to $42,500. In April, it slipped to $32,500 to $42,000. Similarly, for 300 feet jackup rigs, the March range was $55,000 to $65,500, while in April it was $53,000 to $65,000. The Locator tracks contracts over the past three-month period. Industry observers don't view this as a problem unless, first, oil prices do not firm considerably by the end of the year, or second, natural gas prices fall from the $2.50 range at which they are presently trading.... Tom Marsh, a drilling analyst with Offshore Data Services, says it's way too early to anticipate what will happen. "What's happened is that the market is fairly well in balance in terms of supply and demand [of equipment]," Marsh says. "We were going to have that regardless of what oil prices did. It's not a growth situation, but it doesn't have to be because companies are making money off rigs." There's not one rig in the world's offshore market today that's losing money, Marsh says, in explaining the supply/demand balance of the rig market.... Look for rigs to move out of the Gulf in coming months as contracts are typically longer and day rates are higher internationally, Marsh says, which will help tighten the market a bit on the supply side. So far, the number of rigs affected by any softness in rates is very small, Marsh added.... Kevin Simpson at Merrill Lynch says he has built in somewhat lower rates -- up to 8% on the high end -- for all the offshore drillers as contracts roll over in the Gulf. "Our judgement here is that jackup rates have some additional risk, but there is no meaningful decline from here."... Good work Mavis, keep it up