Show BUSINESS end the STOCK MARKET by BABSON'S REPORTS INC 1971 OFFSHORE OIL INDUSTRY Offshore production accounts for some 18 per cent of the worlds world's oil output and is growing steadily Contributing to the industry's smart rate of expansion is the quickening pace of this activity abroad The list of countries producing from offshore fields grows grows' larger each year and a host hast of other nations are waiting to activate such funds One reason for this growing pursuit overseas is the extremely high potential of many foreign areas While the Mississippi Delta still ranks first in potential potential potential po po- po- po other top prospects include the Persian Gulf offshore Indonesia the coasts of West Africa the North Sea area the he Red lied Sea and the M Jiter I IThe The Th Domestic Scene The year two ban on Outer Continental Shelf leasing in domestic waters originally originally originally ori ori- brought about by the incident in the Santa Barbara Darbara Channel was ended with the December 15 1970 Webster Webster Webster Web Web- ster Louisiana Federal Offshore lease sale Also the Interior Department has published a tentative schedule of oil and gas lease sales through 1975 with most of the sales involving Louisiana and Texas offshore localities With this renewal of lease sales the domestic outlook has brightened consid consid- Exploration off the Louisiana coast has been limited only by the unavailability unavailability un un- un availability of rigs Furthermore Interiors Interior's Interiors Interior's In In- roster of lease sales sales' should Exploration off the Louisiana orderly pace ower the foreseeable future Opportunities During the spurred by population population population tion growth and increased per capita use the demand for energy could reach near- near crisis proportions At the present time consumption of domestic energy is rising rising rising ris ris- ing about four per cent annually while that of other free world nations is expanding expanding expanding ex ex- some six per cent World consumption consumption consumption con con- of energy could grown 60 GO per percent percent percent cent over the coming decade and oil and gas are expected to account for two-thirds two of the total As the demand for energy explodes offshore exploration and production can only intensify By Dy 1980 offshore output may well reach 25 million barrels a aday aday aday day compared with an estimated six million barrels in 1970 or about one one- third of world production During the this figure could reach 50 per percent percent percent cent of world output Some Difficult Challenges While the offshore industry has exciting exciting exciting ex ex- citing possibilities for the it must also face some difficult challenges For instance as exploration moves farther offshore in quest of fresh reserves problems problems problems pro pro- of drilling and producing in steadily stead ily lilt deeper waters must be over come And this must be accomplished cally Still another of source problems one over which the industry has little if any con control troll is the squabbling concerning rights to certain offshore areas For example Colombia and Venezuela have clashed over the Gulf of Vene Venezuela ela while Japan Taiwan Korea and Red China have tangled over rights in the till East China Sea Gov hassles like this can only hamper ham per future offshore development Investment Advice Encouraged by favorable industry prospects pro pro- the stocks of most companies Inthe in inthe inthe the offshore industry staged a vigorous recovery from their 1970 lows Furthermore Further more more these issues held up well during the late spring summer spring summer market tion lion While Babson's Research Depart ment meat is optimistic about the industry's future it Is felt that marketwise the equities of most offshore companies will have to catch their breath at least temporarily before renewing their upward trek Therefore we would suggest suggest sug sug- gest deferring v ne new p purchases of such issues at this time Babson's B Research Department does however recommend purchase of the Offshore Company five per cent Convertible Debentures res speculative speculative grade of 1992 f for such investors as may be seeking longer term longer term appreciation appreciation appreciation along with some income |