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

To: Les H who wrote (32495)	12/5/1998 11:26:00 PM
From: MARK BARGER	Read Replies (1) \| Respond to of 95453

In my newspaper I read abouit a$500 mil. rig that sank in the Gul f of Mexico. Does anyone know anything about it? A Texaco contract. Mark

To: Les H who wrote (32495)	12/6/1998 12:46:00 AM
From: Gameboy	Read Replies (1) \| Respond to of 95453

Studying EIA figures and second guessing OPEC is an exercise in futility. Suppy/demand figures for oil reminds me of the definition of "prime rate". In years past there was a brouhaha over who got a banks' "prime rate" and a debate over what "prime rate" really meant. It turns out that a bank's "prime rate" is whatever a bank says it is - it isn't a bank's lowest rate or the rate it gives it's best customers. Likewise, it appears that the supply and demand for crude oil is whatever "big oil" (Exxon, British Petroleum, Royal Dutch/Shell, Texaco, et al) say it is. OPEC is merely peeing into the wind. Could it be that the "big oil" boys are up to something? Marc, I have to admit I had to chuckle when you answered a request for information on investing in the oil sector by suggesting (among other things) that the newcomer read The Prize. In retrospect, you seem to have been right on target. "Big oil" is a club, and they do meet regularly - and not necessarily secretly in Scotland; they certainly were in Capetown, recently, right along with OPEC - and "big oil" is definitely focused on "the prize". Our former CIA Chief, and President, George Bush, was in Kuwait last week. I personally doubt if the price of oil rises before Kuwait opens it's doors to "big oil" - I believe Saudi Arabia is already cooperating. Slider, I remember you asking Redman his favorite steel stock (his was NUE). Check out INMT - this slingshot is pulled back about as far as it can go. Best of luck, Steve

To: Les H who wrote (32495)	12/6/1998 4:34:00 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 95453

Note that even this very bearish piece from the HOUSTON CHRONICLE says that oil industry consolidation will not impact OS pricing in the long run. HoustonChronicle.com Section: Business HoustonChronicle.com Business forum December 04, 1998, 09:55 p.m. Mergers may squeeze out oil-services companies By LOREN FOX NEW YORK -- If there is one clear loser in the planned merger of Exxon Corp. and Mobil Corp., it may be oil-services companies. Exxon's chairman, Lee R. Raymond, in announcing his $75.6 billion bid for Mobil, said he could conceivably cut $1.5 billion from the combined companies' capital spending of roughly $15 billion. That means less money spent on the companies that rent drilling rigs, evaluate rock, make drill bits and provide the whole array of products and services that make the oil field work. Worse yet, many observers believe the Exxon-Mobil merger, following the announcement of British Petroleum Co.'s planned purchase of Amoco Corp., will spark a wave of consolidation among oil companies, which will lead to further spending cuts. Declines in capital spending have been a worry all year for the $85 billion oil-services industry, as oil companies have cut back in response to depressed oil prices. Since the spring, oil prices have lingered at 25 percent to 45 percent below typical levels. "Spending will be down just because of low oil prices. But now consolidation will bring spending down too," said Lehman Bros. analyst Paul Chambers. Oil companies have been turning to mergers as a way to cut costs, as low prices have hurt their operations. Last month, for example, independents Houston-based firms Seagull Energy Corp. and Ocean Energy agreed to merge in a $1.1 billion deal that some observers viewed as a combination of two weakened players. Chambers expects global capital spending on oil services to fall 25 percent next year, a bigger drop than the 10 percent to 20 percent projected by many analysts, partly due to the mergers. He pointed out that three supermajor oil companies -- Exxon Mobil Corp., Royal Dutch/-Shell Group and BP Amoco PLC -- would control close to 28 percent of all oil services spending. Chambers said the market would favor the larger oil services companies, such as Schlumberger Ltd., Halliburton Co. and Baker Hughes. Oil mergers will mean short-term pain, said Arvind Sanger, an analyst at Donaldson Lufkin & Jenrette Securities Corp. But he said spending cutbacks eventually will lead to less production growth, which will help oil prices. Sanger said larger oil companies won't have any greater pricing power in dealing with oil services companies. "Pricing for services is driven by supply," he said.