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

To: Tulvio Durand who wrote (24573)	6/23/1998 2:07:00 PM
From: Czechsinthemail	Respond to of 95453

The quotation from Forcenergy in that article is telling: "If we had more cash flow, we would drill more wells." Multiply this statement by many independents and you have the predicament of less cash flow in the industry to fund drilling projects. It is true that the major oil companies, who are the ones undertaking the deep drilling projects, also have deeper pockets. However, the reductions in overall drilling demand may have some effect on the relatively stronger deepwater business. For one thing, there are likely to be tougher negotiations on dayrates when there is less overall demand for shallow rigs and land rigs. This may impact future cash flow if long term contracts are renegotiated at less favorable rates. The deep drillers are likely to show a steadier business whether oil prices go up or down, but the greater long term potential may be with the companies that are currently looking most distressed by virtue of their ability to capitalize on increased drilling demand as it materializes. Baird