OILFIELD EQUIPMENT Analysts have high hopes for the deepwater rig segment

Mar 01, 2008 | 01:34 PM |

While soaring oil prices are driving some new money into the sector, the outlook for demand is split, prompting analysts to question whether corporate investments in new equipment are truly warranted. The dividing factors appear to be onshore vs. offshore drilling and whether the activity is within North America or on the international scene.

Offshore rig activity is expected to remain strong, but demand for onshore oil drilling rigs is a different story. Despite oil prices hovering near $100 a barrel, onshore demand for rigs is expected to decline across North America after peaking during the past 12 months, according to industry analysts.

"The consumption for rigs should slow down after 150 were added in the last year," said Kevin Lo, an analyst at First Energy Capital Corp. in Calgary, Alberta, "which begs the question, why do we need more rigs? By contrast, the offshore rig market should remain strong."....

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