Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Ensco International Inc. (ESV) -- Ignore unavailable to you. Want to Upgrade?

To: Don Parker who wrote (1132)	4/22/1998 5:45:00 PM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 2005

Don, I did not receive the private post; however I just changed my e-mail address on my profile to an address that is more reliable- so you might send it again..... I agree that day rates will "back up" a bit, just by instinct. But as I have previously noted, the cost of drilling wells is just one of about 20 parts that go into the costs of exploring for, finding and producing oil & gas. I believe that day rates will drop a bit as energy companies get more sophisticated and rapid in tracking costs. But the reality is is that there's not a lot of surplus rigs available with qualified crews around the world. If you want a weak crew with poor well control capabilities, I do know of 3 or 4 Vietnamese-Russian Drillings rigs available offshore Vietnam. But would you risk your coporate reputation/checkbook on a possible offshore blowout just to save say $10,000/day in day rates- No you won't! And the reality is for the drilling companies is that their financial condition improves daily, and the drillers reduce internal costs themselves in a number of fashions. So even if day rates back up a bit, I bet that profit margins remain strong. Gosh look at dell or Compaq- or heck, look at the oil companies, my industry. From 1983, the price of both oil abnd gas has dropped over 50%! And yet for the last year soil companies ahve been posting record earnings- what goes here? Two things- the cost of borrowing money has fallen significantly; and the use/application of technology allows companies to operate much more efficiently now- and cut costs faster than revenues are reduced.... For e.g. go to RDC's Jan earnings release and read how much $$ annually RDC will save by calling in and paying off one of its debt obligations prematurely.... Sincerely, Doug F.