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

To: Gary Burton who wrote (39864)	3/14/1999 12:53:00 AM
From: Douglas V. Fant	Read Replies (2) \| Respond to of 95453

Gary, That's a fair assumption. Diana g. earlier today posted a note stating that major oils were still holding their purse strings. That is true. But do note that the capital budgeting process in energy companies has changed due to technology like every other industry. Five years ago you took all of your well proposals to upper management for approval or rejection- central planning a la the USSR... Well about five years ago with the advent of better and more powerful servers, software packages, computers, major oils began to decentralize the capital budgeting process. Now you go into upper management and show your proposals and seek a basket of capital dollars- some absolute, some discretionary- called red-lined funds in corporate parlance- and then you spread them around your best prospects in your portfolio. The absolute dollars you can spend without further upper management input. If these first expenditures are successful the you can petition for use of the red-lined dollars later in the year. Also locally you maintain a portfolio of well proposals drills, reworks, reentering wellbores- and you continully upgrade your files based upon new data obtained, swapped, traded for on your potential prospects. Each prospect is run at various pricing/production volume scenarios on the software package. If oil prices rise then you adjust that variable in the program. The above has two impacts upon OS companies. If your budget was cut absolutely (no red-lined funds) then not much will change before the next capital planning cycle regardless of the oil price (usually late fall annually). But if you have red-lined funds and improved oil prices justify a given well proposal, then you show it to upper management, who simply nods "yea" or "nay",and then you do it. Assuming that oil prices stick at the $15/bbl wti range (the standard oil price planning level for most energy corporations), then action will pick up- but it will pick up gradually, and then accelerate after Jan 2000 subsequent to the fall budget process....

To: Gary Burton who wrote (39864)	3/14/1999 1:38:00 AM
From: John Carpenter	Respond to of 95453

I believe that the majority view is that shallow water and land guys will rebound fastest- i.e. give you the biggest bang for the buck. What the major integrated oils are saying is that they have limited interest in shallow water and land because the majority of the world's unexplored acreage lies in the deep waters(particularly in depths greater than 3000 fleet) There's been a lot of deepwater success off the shores of West Africa recently- I believe DO has some exposure there. Success has been reported off the coast of Angola- I'd be interested in knowing who has rigs there.