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

To: Gary Burton who wrote (32535)	12/7/1998 12:42:00 PM
From: Douglas V. Fant	Respond to of 95453

Gary, Correct economics do not change on any individual project. However as I just previously posted, companywide the average cost/bbl or bbl eqv for production will drop since you have less administrative staff overseeing more daily production. So that means more efficient use of capital. Now for suppliers if two companies merge, and they use different suppliers in any given area, then they may choose to use only one of those two suppliers moving forward- but the overall amount of work does not change. In fact the anlysts are misinterpreting Exxon-Mobil's announcement that they will cut the exploration budget by $750mm dolllars. That does not mean that Exxon-Mobil will pull out of any projects- how could they??? They haven't merged yet! They have no idea what the other's exploration budget entails.... The $750mm savings comes both from savings on drilling unnecessary wells where both companies own for e.g., separate formations, true- but it also comes from where Exxon Mobil maintain separate staffs yet work the same project- say deepwater Indonesia; also where refineries sit side-by-side. Now in Indonesia the two companies intended to drill joint wells on their prospects in the first place. Now they just need one office staff to do it. From a corporate grand strategic view, both Exxon and Mobil, e.g., have corporate goals for increasing reserves/production. Merged or not those percentage goals probably will not change. A certain number of wells will need to be drilled to find that gas/oil. That will not change. Also world energy demand will not change because of mega mergers. If oil/gas usage keeps climbing beyond 73.5mm bbls/day, then someone will be there to drill the wells to find the oil.... Sincerely, Doug F.