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

To: The Ox who wrote (37514)	2/13/1999 12:48:00 PM
From: Mike from La.	Read Replies (1) \| Respond to of 95453

Don't know the answer to those questions. My point is that the '80's recovery took so long because it followed such an extensive period of e&p, the production from which flooded the market for years, and way too many speculative rigs. Most of the present day rigs are still the old rigs, very few new rigs, except deepwater, We still have a very old rig fleet. Once the demand for rigs starts growing again, hopefully within our lifetimes, a rig shortage may be in the works. Seems hopelessly in the future to think about a rig shortage, but the more severe the cutbacks now, the more severe the counter action, but that's what the long term investors are all about. Mike from La.

To: The Ox who wrote (37514)	2/13/1999 3:45:00 PM
From: William JH	Respond to of 95453

I don't know about the efficiency of the rigs, but the 3D mapping has caused drilling success rates approaching 80% and greater. I believe about 30% was the norm prior to seismic. BWDIK. As an aside, I bought a oilfield services company in 1983 due to a brokerage report that said the companies' tax loss carry forwards were worth more than it would cost to buy them out, so the company could be bought for free. I sold out later for a loss, and the stock ended in bankruptcy and at 0. It was an NYSE listed company, GEO International.

To: The Ox who wrote (37514)	2/14/1999 12:11:00 AM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 95453

Michael, William JH is correct-3d mapping makes prospects more easily identifiable. Also better downhole bit control. Steel is very flexible and when drilling a well the drill string will slide right on harder formations, or even corkscrew if you do not control the bit well. Technology has allowed drillers to control the drill bit and its locations much better than say 20 years ago in 1979. Also horizontal well drilling technology is made possible by 3d seismic. Could not have (successfully) drilled a horizontal well in 1979-i.e, stayed in the target formation.... Offshore satellite data allows dynamically positioned drillships to maintain position better- and also to spud in the drill bit within three meters of the designated drilling location- no small feat in the middle of a big ocean on a rolling drillship...... Drilling technology today is accelerating in its improvements... Sincerely, Doug F.

To: The Ox who wrote (37514)	2/14/1999 2:27:00 PM
From: Razorbak	Read Replies (2) \| Respond to of 95453

Productivity Today vs. 1980's <<Ok, we know that the rig count is substantially lower. My question is how much more productive are today's rigs over those from the 80s? We know that technology has provided efficiency gains, can someone quantify those gains? Are today's rigs 4 times more efficient then those of the past?>> Michael: When comparing today's statistics to those from the 1980's, keep in mind the following key difference: 1) In 1980 the cost of finding, developing and extracting a barrel of oil was $11.00/barrel. 2) Last year, due to technology (e.g., 3-D seismic and directional drilling), the cost of finding, developing and extracting a barrel of oil was $5.50/barrel. The lower production cost basis of today relative to the 1980's is the primary reason why it is misleading to compare today's oil price chart with the chart from the 1980's and extrapolate the conclusion that we are on the verge of a major recovery in oil stocks and oil service stocks. IMHO, worldwide supply will not dry up as quickly with $10/barrel prices today as it did back in the 1980's. Razor