Newspaper article THE JOURNAL RECORD

Improved Technology Helps Drillers Return to Prosperity

Newspaper article THE JOURNAL RECORD

Improved Technology Helps Drillers Return to Prosperity

Article excerpt

N.Y. Times News Service

Boom times seem to be here again for the oil and gas drillers.

Drilling in the Gulf of Mexico is back at the levels of its heyday in 1990, when oil and gas prices surged because of fears that the Persian Gulf war would lead to shortages.

That rush to drill collapsed as oil and gas prices fell. Oil plunged to $14 a barrel in late 1993 from a 1990 high of $40. And investors who had bet on the volatile stocks of oil service companies took sizable losses.

Now, some analysts and industry executives say, the current upturn is likely to be different form the last one. The key, they said, is that the drilling boom is not being fueled by a spike in the price of oil and gas.

"What we're seeing is activity not being driven by commodity prices but by a fundamental change in the economics of drilling," said Mark Urness, an analyst who follows oil service companies for Salomon Brothers.

Although their stock prices are reaching peak levels, he is recommending such companies as Global Marine, which traded Wednesday at $5.125, off 12.5 cents; Noble Drilling, $7.625, off 6.25 cents; Tidewater, $24.625, up 12.5 cents, and Ensco International, $15.625, unchanged.

Kurt Hallead, an oil service analyst for Rodman Renshaw Inc., is urging investors to buy Sonat Offshore, which traded Wednesday at $28.125, off 12.5 cents, and Global Marine.

"This recovery is taking place in a significantly different environment than in the past," Hallead said. "Oil companies are saying internally that they have to find projects that give them a return on investment at the current level of oil and gas prices."

The price of oil has recovered to about $18 a barrel, well off its highs but at least off the bottom, while gas prices are still in the doldrums, at about $1.50 for a million cubic feet. …

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