Robert Rose, chairman & CEO of Global Marine

This is a partial transcript from Your World with Neil Cavuto, October 15, 2001.

NEIL CAVUTO, HOST: Well, you would think, certainly with all the tension in the Middle East, that oil prices and oil stocks would be sky- high. They are not: Light sweet crude oil, for example, down more than 20 percent since a brief spike right after the attacks. And oil stocks? Well, case in point: Oil driller Global Marine saying that third-quarter profits nearly doubled from last year, but its stock fell. It's down about 10 percent since September 11th, close to 48 percent since the beginning of the year.

Joining us now to help explain what's going on, the company's chairman and CEO, Robert Rose. Mr. Rose, good to have you back.

ROBERT ROSE, CHAIRMAN & CEO, GLOBAL MARINE: Thank you, Neil. Always a pleasure to be with you.

CAVUTO: What is going on? This seems to fly in the face of what you think would be the reaction. What's going on?

ROSE: Well, the market is obviously recognizing the fact that energy consumption and economic activity are directly linked, and as we go into the recession, which was exacerbated by the events of September 11th, we see a reduced demand for hydrocarbons and energy, particularly natural gas and crude oil. For example, it's been estimated, Neil, that just the reduction in airline flights has reduced demand for crude oil in this country by 750,000 to a million barrels per day.

CAVUTO: In the face of that, though, we still get indications from OPEC, if not immediately than soon, they're going to start cutting back the production. Do you think that's the case?

ROSE: Well, it's entirely possible. They said that they wanted to maintain a range around $25 a barrel. Currently, oil is in the 22.50 or so per barrel range. So it could be their next course of action, which would be to reduce supply.

CAVUTO: Still, Robert, you had a very good third quarter, almost doubling net income from the year-ago period, $62 million in this latest period, as I said, versus 32 million in the prior year. Yet Wall Street seems to be saying, well, it's just a matter of time before the lagging effects of this price drop hit you. What do you say to that?

ROSE: Well, I think that's probably accurate. But the thing about the Global Marine fleet is because of the type of equipment we offer, we have the ability to generate superior day rates or daily revenues in a rising market, and we have the ability to generate superior utilization in a declining market. So we would expect that we'll continue to show better-than-average results.

CAVUTO: Robert, it's always very tough to judge this sort of thing, and I don't want to inflame tensions here. But if there was a problem with the Pakistani government — you hear about all these Islamic fundamentalists who are causing, you know, a lot of commotion — if something bad were to happen to Pakistan, the government is overthrown, then I would assume all bets are off. Right?

ROSE: Absolutely. If you look at the Arabian Gulf and you look at the Gulf of Hormuz, which is where all of the traffic has to come out of to distribute oil out of the Middle East region to the world, if anything interrupts that supply, you can just imagine the effect that it could potentially have.

CAVUTO: Would it affect your drilling activity?

ROSE: Well, for one thing, it would certainly increase our drilling activity if that were to occur.

CAVUTO: In other words, to move fast?

ROSE: Yes.

CAVUTO: I gotcha. Robert Rose, the chairman and CEO of Global Marine, thank you very much for coming.

ROSE: Thank you, Neil.

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