The wells may yield nothing more than a lesson in what happens when drilling deeper than the height of Mount Everest. Oil companies including BP Plc and Royal Dutch Shell Plc are seeking to replace the millions of barrels of oil pumped each day. Any failures would leave the producers vulnerable to declining reserves, output and earnings. Exxon Mobil Corp. and Chevron Corp. are spending $250 million to search for natural gas at a record six miles beneath the Gulf of Mexico, where temperatures reach 600 degrees Fahrenheit, testing the limits of drill bits and pipes. Chevron last week asked Transocean Inc. to build a rig capable of boring 7 1/2 miles down as part of a $1.7 billion order. ``We are concerned with production growth year after year after year,'' said Gene Pisasale, a former Exxon Mobil geologist who helps oversee $48 billion at Mercantile Bankshares Corp. in Baltimore. The bank holds 5.1 million Exxon Mobil shares and 870,000 Chevron shares, according to Bloomberg data. Energy stocks have become cheap relative to profit largely because of the potential for setbacks. The price-earnings ratio for Morgan Stanley Capital International's World Energy Index of 83 producers fell last month to 11.3, the lowest since at least 1994. A year earlier, the ratio was 14.1. Exxon Mobil shares, down 1.4 percent this year, trade at 11.4 times earnings, and Chevron sells for 8.7 times profit. BP stock is up 3 percent this year, trading at 10.5 times income, and Shell's B class shares in London are at 8.5 times earnings. `Very Risky' Crude oil prices are up 18 percent in the past year and reached a record $70.85 a barrel in August after Hurricane Katrina devastated the Gulf Coast, shutting refineries, flattening rigs, and cutting oil and gas production. As prices surged, the oil companies were criticized for not spending enough to boost energy supplies. The world's three largest oil companies -- Exxon Mobil, BP and Shell -- last year reported a collective net income of almost $84 billion. That's equal to $13 from each person in the world. Among the five largest publicly traded oil companies, Shell, BP and Total SA of France last year failed to find enough oil and gas to replace what they produced, based on Securities and Exchange Commission filings. Exxon and Chevron replaced more than 100 percent of what they pumped. Exxon Mobil and Chevron are seeking a new deposit at twice the depth of the existing Gulf fields. Their target may be large enough to heat the U.S. with natural gas for more than two years. Geology, Politics ``It's a very risky question as to what we will find,'' Stuart McGill, senior vice president at Irving, Texas-based Exxon Mobil, said in an interview in early February. ``We think it's worth the risk.'' Geology and politics are forcing the oil companies further afield. Production from areas such as the North Sea and Alaska have peaked after decades of pumping. The size of new discoveries has been declining worldwide in the past decade, said Eric Sprott, who oversees C$3.2 billion, ($2.81 billion) at Sprott Asset Management in Toronto. The average size of the seven biggest oil fields scheduled to begin production this year by publicly traded companies is 728 million barrels, according to Deutsche Bank AG analysts. That will drop by about half next year. Countries such as Russia and Saudi Arabia are saving their best fields for domestic oil companies. And China and India are becoming more aggressive in acquiring foreign fields that historically had been taken by Exxon Mobil, BP and their peers. `Absolutely Astounding' The Exxon well, known as Blackbeard, is supposed to reach 32,000 feet (9,754 meters) in May at a cost of $110 million. That would beat the record depth of an Oklahoma well known as Bertha Rogers, which got to 31,441 feet in 1974, after two years of drilling. Chevron's $140 million Knotty Head project reached 30,589 feet below the Gulf of Mexico seafloor in December. The well encountered 600 feet of petroleum-laced sand, according to Chevron spokesman Mickey Driver. Additional wells will be drilled off the main shaft to determine whether the deposit will yield enough to be commercially viable, he said. These wells ``are big, costly as hell and absolutely astounding,'' said David Rinsink, an Apache Corp. geologist and president of the Houston Geological Society. ``Just physically keeping such a hole from collapsing on itself is a challenge, never mind that you have no idea what's ahead of you down there.'' Taking Risks Derek Vogler, who helps manage $11 billion as vice president of investments at Country Trust Bank in Bloomington, Illinois, said the big oil companies are able to take advantage of rising commodity prices with projects that are too large and risky for smaller companies. ``The oil companies are looking anywhere they can to find energy,'' Vogler said. ``It takes an Exxon, Chevron, BP or Shell to take on the risks of the largest exploration projects.'' As energy prices surged 2 1/2 years ago, Country Trust added shares of Exxon, Chevron and ConocoPhillips, the third-biggest U.S. oil company, Vogler said. McGill said Exxon Mobil will take big risks for the chance of long-term payoffs. The company's first attempts to find oil off the west coast of Africa in the mid-1990s failed. The continent last year became Exxon's biggest source of crude. ``People often forget that the first two wells drilled in Angola were dry,'' McGill said. Exxon is prepared to continue the search for gas at more than 30,000 feet beneath the Gulf of Mexico if Blackbeard turns out to be a dry hole, McGill said. Hunting Elephants The last giant discovery in the Gulf of Mexico, or ``elephant'' in the industry jargon, was seven years ago when BP found Thunder Horse, a field with the equivalent of more than 1 billion barrels of oil. Blackbeard and Knotty Head are bets on making a discovery of that scale, said Philip McPherson, a researcher at C.K. Cooper & Co., an Irvine, California, investment bank that specializes in energy. ``If an Exxon or a BP finds a 1 billion-barrel field, which would be an elephant, it would be a big deal for them in terms of their bottom line,'' said McPherson. ``If it's a 100 million-barrel field, it's a nice find, but it's not a reason to own the stock.'' PIN/BLOOMBERG