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Oil drilling activity decreased at an 8% annualized rate worldwide in the 2nd qtr of 1998 as measured by drilling rig use, and there has been a like decline in the demand for drilling equipment and services. The petroleum industry has turned to offshore drilling in response to declining reserves, but it will be several years before these projects are productive. These stocks are not timely in 1998 and are more appealing for the long term.

There has been increased offshore oil exploration in the West Africa, North Sea, and Gulf of Mexico areas and this has provided strong results for those companies which offer offshore drilling equipment and services. Earnings have also increased for firms that provide advanced services and equipment, such as seismic surveys, completion tools, and drill bits. The stocks of these industries are timely in 1998, but investors need to consider safety.

Offshore oil exploration in West Africa, the North Sea, the Gulf of Mexico and the US has been increasing by companies that are faced with declines in oil and gas reserves. The demand for drilling equipment and services with the increased exploration has driven up the earnings for the oil field equipment and services industries as a result. These stocks are timely for 1998, but investors need to consider safety when making selections.

Exploration activity in many offshore areas has rapidly increased in the 1990s due to the decline in oil and gas reserves, and drilling technology has also advanced during the same period. Oil and gas exploration has also become more profitable with the combination of higher commodity prices and lower costs, and drilling services and equipment are more cost-efficient. Stocks in this industry are timely, but cyclical, for 1997 and 1998.

There has been increased offshore exploration activity by the petroleum industry, particularly in West Africa, the North Sea, and the US portion of the Gulf of Mexico, with greater oil and gas demand. Exploration costs have also been reduced through technological advances, and earnings gains have resulted for the petroleum services and oil field equipment industries. The stocks in this sector are timely in 1997, and have growth potential as well.

The petroleum services industry and oil field equipment and supplies industry had possibly the best stock price and earnings results of any industry in 1996 and, although Jan 1997 saw a downturn in these results, despite overall market increases, these equities will be leaders for 1997. Recent trends in consolidation, energy consumption, economic growth and technologies will please both short and long-term investors. Individual Safety rankings should be examined before investing in specific companies.

The petroleum services industry and the oilfield equipment and supplies industry stocks have the highest timeliness rating of any industry, have shown record growth and profits over the last ten months, are seeing a rebirth of offshore oil and gas drilling and a jump in stock prices that make many companies' securities a prized investment. Mergers, acquisitions and consolidations during the past years' along with carefully planned price slashing, have given these industry stocks the good results that investors seek.

Consolidation in the oilfield services and equipment industry has become increasingly important after the collapse of the oil boom in 1983. However, the fleet of mobile offshore drilling rigs has decreased, and rising drilling demand is driving rates upwards. Offshore rig operators' earnings are likely to rise for the next three to five years as a result. These stocks are now timely and long-term investors will be well-rewarded.

The number of offshore drilling rigs has decreased to about 575 in 1996 due to lower daily rental rates. Increased drilling activity for petroleum and natural gas in 1996, however, is giving suppliers and offshore drillers greater earnings prospects for the next three to five years. Coiled tubing and 3D seismic are among technologies that are becoming important, also. Investors for the long term will find several good stocks here.

Stocks in the oilfield services and equipment industries outperformed the market in 1995. Oilfield services companies are consolidating to absorb the overcapacity which has plagued the industry since 1983. Oilfield equipment will be in greater demand in the late 1990s, and technological innovations for equipment are becoming economically more important. Individual stocks must be researched, especially for safety, before investment.

Slightly increasing oil prices will aid the oilfield equipment and services industries, but land drilling will decrease with the 20% drop in natural gas prices in 1995 from 1994. Oil companies are also subcontracting out more often. Offshore drilling is improving due to a royalty relief bill, 600 undrilled leases located in the Gulf of Mexico, and technological innovations. Several stocks are attractive, even with uncertain prices and other risks.

Companies which provide traditional oilfield services, technology, and quality will benefit from higher oil prices, while natural gas drilling will be limited due to depressed prices. Offshore drilling rates have recovered to $120,000 a day for rigs that can operate in harsh environments and deep water, and industry consolidation is increasing. These stocks will outperform the market for the next three to five years.

Rising natural gas and oil prices in the 2nd qtr of 1995 have allowed oilfield service and equipment stocks to outperform the market. This is expected to continue for 1995 and 1996, especially for international and technologically innovative companies. Timeliness rankings have improved for this industry and Halliburton is ranked 1. These stocks will have good returns for the conservative investor.

Prices for natural gas and oil are expected to improve from their 1994 lows. Companies in the oil field service and equipment areas, especially in North America, are forecast to improve earnings in 1995 and the long-term future along with this price recovery. Overcapacity in these industries has led to mergers and consolidation. Conservative investors may benefit from ownership in several of these stocks, especially those that are internationally active.