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

To: waverider who wrote (21841)	5/11/1998 7:47:00 PM
From: pz	Read Replies (2) \| Respond to of 95453

LONDON, May 11 (Reuters) - Oil prices firmed on Monday but lacked the conviction to hold above $15 a barrel as renewed calls for producers to consider a second round of output cuts were brushed aside. London futures for benchmark North Sea Brent closed 16 cents a barrel firmer at $14.85 after slicing through $15 earlier in the session. Dealers remained sanguine about the chance of further output cuts from world producers. They said that in spite of a call from Qatar for more cuts, it now looked likely that producers would wait at least until June to consider more output restraint. Qatari Oil Minister Abdullah al-Attiyah said on Monday that oil markets remained very weak and he wanted ministers to quickly agree more output cuts. Attiyah said he wanted Arab oil ministers meeting in Damascus to consider further cuts in production to reduce what he estimated was two million barrels a day of oversupply. "Qatar is demanding during the consultations in Damascus that a further cut should be made to support prices," Attiyah said. Major oil producers have pledged reductions of about 1.5 million barrels a day (bpd) to year's end including 1.25 million from Organisation of the Petroleum Exporting Countries (OPEC) members. But the world's largest oil producer, Saudi Arabia, appears optimistic that oil markets are now robust enough to recover without more supply being withdrawn. A Gulf source familiar with Saudi thinking said on Monday in Damascus that the markets were on the mend, bringing supply and demand back into balance. "We are 100 percent sure prices will not fall," the source told reporters on the sidelines of an Arab energy conference. He said it could take another four to six weeks to see the full impact on the market of the cuts agreed by OPEC and non-OPEC countries after a secret March meeting hosted in Riyadh by Saudi Arabia. But he said all producers, including Saudi Arabia, remained open to the possibility of a second round of production cuts if necessary. Producers were discussing ways to improve the market "including the possibility of further production cuts if required," he said. Mexico, one of the Riyadh trio of producers which orchestrated the cuts, said last week that the outlook for the market indicated more cuts would probably not be needed. The source said Saudi Arabia was satisfied that producers were sticking by those pledges. "We are sure that most countries are committed to pledges -- OPEC and non-OPEC," he said. The International Energy Agency on Monday said that OPEC had implemented most of the oil production cuts it had promised. The agency estimated OPEC produced 27.95 million bpd in April, some 1.03 million below February output levels used as a benchmark. Prices in dollars per barrel: May 11 May 8 (close) (close) IPE June Brent 14.85 14.69 NYMEX June light crude 15.16 15.13

To: waverider who wrote (21841)	5/11/1998 9:18:00 PM
From: Bazmataz	Respond to of 95453

Low oil price barely impacts offshore rig rates By Andrew Kelly HOUSTON, May 11 (Reuters) - The long slide in crude oil prices since last fall has had little impact on dayrates for offshore drilling rigs operating in the Gulf of Mexico which so far have remained well above their levels of a year ago. Houston-based Offshore Data Services said the latest numbers showed cuts in some oil companies' exploration budgets had led to a modest decline in rates for just one segment of the market. ''That impact on budgets has finally trickled into the rigs market...but the only place that it's become readily apparent is among the more expensive jackup rigs,'' said Tom Marsh of ODS. Prices for a barrel of West Texas light crude have fallen from about $20 a barrel this time last year to just over $15 now. Some big oil and gas companies such as Unocal (UCL - news) and Amoco (AN - news) have cut their exploration and production budgets to offset a decline in their income caused by lower oil prices. Others such as Shell Oil (RD.AS)(quote from Yahoo! UK & Ireland: SHEL.L) and Exxon (XON - news), however, have said they are not yet planning to cut budgets. Marsh said so far budget cuts had only impacted jackup rigs operating in the Gulf of Mexico at depths of 300 feet or more. Jackups are literally jacked up on long legs of steel. They drill in shallow offshore waters up to depths of 450 feet, ususally on short contracts of two to three months. An exploration and production company hiring a cantilever jackup capable of drilling in over 300 feet of water would pay $62-72,500 per day in May, down from $65-73,000 in April. But that still leaves rates well above the May 1997 level of $48-55,000, according to ODS figures. Marsh said there was little danger for the time being of this erosion in rates spreading to deep water, where state-of-the-art semi-submersibles and drillships can earn $175-200,000 a day. These vessels work on longer term contracts and typically have plenty of work lined up to keep them busy. In contrast to slack conditions seen in the past, drilling rig supply in the Gulf of Mexico is fairly tight with over 95 percent of the 173 rigs in the area currently at work. However, Marsh says it is important to watch out for any further cuts in exploration and production (E&P) budgets. ''If oil companies decide they have to make major cuts in their E&P spending -- and I'm talking cuts of 25-30 percent -- then there's obviously going to be some fallout,'' he said. In contrast to the oil and gas companies they work for, offshore rig operators have mostly reported strong first quarter earnings as the market recovery which began in 1995 continued. The relative strength of North American natural gas prices has helped to keep up drilling activity in the Gulf of Mexico. A handful of drillers, such as Noble(NE - news) and Santa Fe (SCD - news) alluded to a potential weakening of dayrates for shallow water in the second quarter of this year. But recent earnings statements struck an otherwise confident tone with companies reporting healthy backlogs of orders and contract renewals at higher dayrates. Above all drillers have stressed that they are taking a cautious approach to building the new rigs which will be needed as the industry pushes into deeper and deeper waters. In the 1980s speculative building programs -- fuelled by the assumption that oil prices were locked in an eternal upward spiral -- led to surplus capacity and plummeting dayrates. Industry executives say they will not make the same mistakes again and will only order new rigs to be built once they have signed long-term drilling deals with exploration firms. ''You've got to err on the side of being conservative. That means you don't get over-leveraged, you don't build on spec, you build against long-term contracts,'' Paul Lloyd, chairman of R&B Falcon (FLC - news) told a conference in Houston last week.

To: waverider who wrote (21841)	5/12/1998 2:05:00 AM
From: Douglas V. Fant	Respond to of 95453

DiamondH., Soldier of Fortune Convention slated for September 23-27 in Las Vegas- Meet movie stars and mercenaries, such as former members of Special Forces, Foreign Legion, Spetnaz, Navy seals, SAS, SBS, GIGN, and Rangers. Chance to shoot bullets, not flowers! sofmag.com Mercenaries are a common sight in the rougher portions of the "oil patch", like Algeria, Yemen, or Colombia....Which getting past the tongue-in-cheek intro, is the important point to keep in mind. Supply forecasts are often subject to local non- oil-related issues... Don't take all supply forecasts completely seriously... Sincerely, Doug F.

To: waverider who wrote (21841)	5/12/1998 7:42:00 PM
From: rocklobster	Read Replies (2) \| Respond to of 95453

Diamond, My man, who says we bailed the thread? Just lurking in the shadows while we wait for the right moment to pounce. Looks like the OSX is coming right up on support along with some of our favorite drillers and services.. I'm ready to ride them back up again. This time on the long side<<<<gggg>>> The market looks ripe for a correction and I am all cash right now except for some longer term IRA holdings drillers no less. I betcha didn't think I did that long term thing? Well, Sometimes... It's interesting how everytime the OSX makes a new high, everyone thinks it's going straight up never to return.. It seems like Thean has been the most consistent in calling this ongoing trading range scenario along with RON's great charting . If I hadn't been in margin trouble on my last short on GLBL, I would have held the short and closed it out even or even slightly profitable. I didn't feel that we would go straight up but felt like last week we were getting the bimonthly sector rotation. I agree with RON now that it looks like a few more down days and then up again. BWDIK Later, Richard