422 



DRILLING CONTRACTORS AND EQUIPMENT MANUFACTURERS 



Hayden, Stone's Petroleum Offshore Contractors Index 



The securities of most offshore drilling companies have been the subject of 

 a great deal of selling pressure over the past two months. In sonne cases, the 

 recent weakness in certain securities was warranted; in other instances, we feel 

 it has created unusual values. At year-end 1968, the Hayden, Stone Petroleum Off- 

 shore Contractors Index stood at 138. 18, up a hardy 19.7% for the year, more than 

 double the 8. 7% gain for the S & P 425 Industrials. The Index has slipped from 

 138. 18 to 121. 10 for a 12.4% drop between January 1st and March 1st of this year, 

 a more rapid decline than the 4. 0% posted for the Industrials Index. 



We expect the Hayden, Stone Petroleum Offshore Contractors Index will 

 stay aroxind its present level of 121 for a short while longer, but we forecast that 

 within a month or so it will begin rising. We expect our Index to out-perform the 

 S & P 425 Industrials and the S & P Oil Composite Indices for 1969. We certainly 

 do not see the boomi in offshore drilling stocks ebbing, although their full potential 

 may not be realized until the stock market as a whole takes on a more positive 

 tone. Our target for the Index in 1969 is 135, or about 12% above the present 

 level. 



STOCK PRICE INDICES 



% Change % Change 



1/3/68 12/31/68 1/3/68-12/31/68 3/5/69 12/31/68-3/5/69 . 

 Hayden, Stone's Petroleum 



Offshore Contractors 115.43 138,18 +19.7% 121.10 -12.4% 



Standard &: Poor's 



425 Industrials 104,09 113,02 + 8.6% 108,51 - 4.0% 



Standard & Poor's 



Oil Composite 130,24 152.23 +16.9% 146,65 -3.7% 



Offshore Petroleum Technology 



Advances in offshore technology are continuing to develop. Especially 

 significant is the design of offshore platforms which are capable of working in 

 various worldwide locations and at different water depths. A vivid example of this 

 is the contract recently awarded by Kerr McGee to a Japanese shipyard for the 

 construction of the Transworld Rig 61. The rig is a combination self-elevating 

 drillship, and a semi-submersible. The rig can move to a new drilling site like 

 any other drillship would, which provides for greater speed and more efficient towing. 

 Once on location, the legs are jacked up and the rig takes on the characteristics I 



of a semi-submersible, capable of drilling in 600 feet of water. Another example 

 of flexibility in rig design is Santa Fe International's Mariner I, which is narrow 

 enough to traverse the Panama Canal, rather than having to take the long route 

 around the Cape from one ocean to the other. This eliminates a significant loss of 

 nonproductive time and cost. Bethlehem Steel Shipbuilding is working on the 



