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The onshore North America drillers saw their earnings (and share prices) skyrocket when oil prices rose last year. But it is relatively easy for exploration and production companies to not renew the relatively short-term contracts for land drilling and workover rigs when oil prices drop and the expl. & prod. cos. start to feel the pinch. Key Energy Group (KEG) noted this happening in its latest financial report. GW would seem to be in the same boat.

Offshore drillers, on the other hand, have longer-term contracts and the lessees are less likely to cancel a contract. Additionally, when offshore rigs wear out (most were built in the 80's or before) they cost much more and take nuch longer to replace.

That's why the sharp management of Pride International (PDE) sold off their North America land rigs and invested the proceeds in offshore rigs--at just the right time. Check out the Pride thread on TMF, especially the posts of cmjohnston on 12/17/97 and 12/22/97. PDE has 2 drillships capable of drilling in water depths of 10,000 ft. under construction and long-term contract and 9 semisubmersibles (6 of them brand new) under long-term contract, plus the largest fleet of platforms in the Gulf. Worth a good look.
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