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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 (23009)	5/28/1998 8:23:00 PM
From: Teddy	Read Replies (1) \| Respond to of 95453

RE: "where's Teddy? Looks like the roof is caving in on the oil drillers<g>" Teddy has been palling around with Mavis again. Here is a few snips from her latest that should wipe that <g> off your face: Top Stories: Oil-Drilling Dayrates Falling; Utilization Rates Under Threat By Mavis Scanlon Staff Reporter 5/28/98 6:22 PM ET Add one more cloud to the storm front that has been threatening the oil-drilling segment. Low oil prices have allowed oil companies to pressure the companies that drill and service their wells to bring their prices down. This pressure has become evident in the Gulf of Mexico jackup rig market, where the bottom dayrate ranges for certain high-end, or premium, jackup rigs have fallen by between $2,000 and $8,000 per day over the past four to six weeks.... ... A more ominous sign for the drillers comes from a recent Offshore Data analysis of the jackup market that indicates demand for rigs may weaken late in the third quarter. Jackup rigs typically are contracted for short-term contracts, or contracts lasting 30 to 90 days, on relatively short notice. Until now, Offshore Data, which collects weekly and monthly data on oil rig rental and utilization rates, has seen no softness in utilization rates, or the number of rigs contracted at a given time. High rates of utilization are a sign of continuing demand for oil drilling equipment, and even with softening dayrates, have been viewed as a bullish indicator in the offshore market. Offshore Data's "market overhang" analysis, which generates what the Houston company calls a "90-day overhang," tells how many rigs have no contract commitments after 90 days, says Tom Marsh, a drilling analyst at the firm. In the strong drilling market of the past 24 months, the 90-day overhang has typically remained at between 40 and 50 rigs, Marsh says, but that number has ballooned to more than 70 in his most recent analysis. (There are 179 rigs that presently serve the Gulf of Mexico, 124 of which are jackup rigs, according to the Offshore Data's Rig Locator newsletter. The utilization rate in the Gulf is 95%.) "That indicates to us there may be a possibility that there will be slackening of demand late in the third quarter," Marsh says... ..."Every month we stay down there is another reason for oil companies to curtail spending," says Norman Rosenberg, an analyst who covers several major drilling companies at Standard & Poor's. "The prospect of slowing dayrate and earnings growth is a real cloud" over the sector, he says... ..."It looks like the downdraft in oil prices since March puts pressure on second-half-of-year earnings," says James Stone, an oil service analyst at Schroder. Stone says that "there's a better than 50% possibility" some of his estimates will have to be revised due to the situation with dayrates. As of May 22, the most recent date for which data is available, second-quarter year-over-year earnings for the oil service equipment group is expected to grow 22%, down from the 25% expected one month ago, according to First Call. Earnings growth for the drilling group, at 51%, stands unchanged from one month ago, says Chuck Hill, First Call's director of research. Looking at what analysts predicted for the drillers' second-quarter earnings growth back in January is more telling: As of Jan. 2, the consensus estimate stood at 70%. Earnings growth of 50% in nothing to sneeze at, but even that healthy growth rate is down dramatically from growth rates of 121% and 142% the segment realized in 1997 and 1996, when the sector started coming back after a decade-long depression.... ..."I think any of the earnings revisions will be for 1999 and the second half of 1998," Rosenberg says.

To: Broken_Clock who wrote (23009)	5/28/1998 8:27:00 PM
From: Czechsinthemail	Respond to of 95453

Here's the story from the oil markets today -- a bit more bearish than the optimistic views expressed on this thread today. The positive news may be that oil prices didn't drop more. _______________________________________________________ 5/28/98 Crude-Oil Futures, Products Weaken On Nymex Amid Bearish Data NEW YORK -(Dow Jones)- Crude-oil and petroleum-products futures settled lower Thursday on the New York Mercantile Exchange, as inventory data showing a build in gasoline stocks continued to weigh on the market. Earlier, there was an attempt to recover some of the morning's losses on a report that Iraq's aid-distribution plan could be approved shortly. July crude oil finished down 14 cents at $14.85 a barrel. August crude oil settled down 10 cents at $15.33 a barrel. Among products: June unleaded gasoline lost 0.76 cent to end at 49.20 cents a gallon. June heating oil fell 0.90 cent to close at 38.98 cents a gallon. July natural gas rose 2.5 cents to finish at $2.071 per million BTUs. Traders said the market firmed a bit after a report, still unconfirmed, that United Nations Secretary-General Kofi Annan plans to approve Iraq's aid-distribution plan as part of the country's oil-for-food plan. On Thursday, Iraq submitted a revised version of its aid-distribution plan to Annan. Phase three of Iraq's oil-for-food plan expires June 2, and most analysts had been expecting a delay in approving the fourth phase. If the program's roll-over is delayed, about 1.6 million barrels a day of Iraqi oil exports would be removed from the world market. Analysts said the latest report should be considered bearish because the gap between the program's phase three and phase four would be reduced. However, the market edged higher as locals weren't sure how to interpret the report. Meanwhile, market analysts had expected a draw, but the American Petroleum Institute reported after the market closed Wednesday a 3.232-million barrel build in U.S. gasoline stocks last week. The build in gasoline stocks to 214.982 million barrels was the most bearish aspect of the report, according to analysts. Most observers had expected a draw as gasoline moved from primary to secondary storage last week leading up to the Memorial Day weekend, which typically sees heavy driving activity. "The market was looking for good numbers for gasoline and it didn't get it," one analyst said. The API said crude oil stocks dropped to 349.527 million barrels, but one analyst said that the draw likely will be discounted, as most of it was seen in the isolated West Coast market. Analysts also had been expecting a greater draw in the Midwest and Southern markets. The Department of Energy data released Thursday morning confirmed much of the API report. DOE said that U.S. gasoline stocks rose 2 million barrels last week and crude stocks dropped 3.2 million barrels. In political developments, traders are expected to monitor world reaction to Pakistan's announcement that it tested nuclear weapons. Analysts said the issue will only become important if it leads to tension in the region. "There's no immediate threat to oil supplies," an analyst said. "It's more of a back-burner issue."