Wow, ladies, what a wonderful exchange of posts concerning the drilling/service industries. Sorry, I was out of town. Oh, and Nancy, I promise to not mix my operators, drillers, support and retrofitters ever again. Also, I noticed you also called CDG a deep water driller. They have: 14 jack-up drilling rigs, 11 land based rigs, 5 mobile offshore production units, and 1- offshore platform rig. They recently purchased Well Services Marine which included 2 offshore platform drilling rigs, one self-propelled jackup drilling rig but I understand they are located in Trinidad and Tobago, British West Indies.. Deep or shallow, they seem to be one of the favorites of the masses. Lets call them shallow.
As I have tried to relay my bias. I am bullish on all the drilling sectors and service/support companies.However, I would like to go on record as a cautious investor at this time controlling any "irrational exuberance"
..Rig utilization is in excess of 95%. The industry has grown at a multiple not seen in years..please check this sight .it is very helpful.in evaluating companies of all sectors
stocksmart.com
Fact: Oil companies committed over 600 million dollars on long 10 year term leases in the Gulf of Mexico last August. 75% of the leases were in depths in excess of 800 meters of water. This requires a deep water rig. Here is the gist: 804 leases (600 deep water) Now you tell me. How are all the leases to be evaluated.. Not necessarily by the bit.Seismic companies that will gain (WAI, VTS).So, the multi-million dollar question is: How many of the leases after subsurface evaluation will deserve the test? Conclusion, as operators (oil companies) have only ten years to evaluate and drill these tracts, this activity should start to manifest itself throughout the next few years.I believe I mentioned that there are less than 50 rigs capable of drilling in this depth of water at this time.however companies like FGII are busy converting shallow water submersibles into deep water semisubmersibles. I will leave further evaluation of offshore activity to Mike.
In the past years, it has been common to experience a decrease in activity in the first quarter of the next year. This may be construed to be a slowdown. But in truth, it is due to the rush by the companies to complete the prior years budget in December. I also believe this phenom is limited to the land drillers because of the independent oil operators which usually spend their budget on this cyclical pattern. It is also very short lived. However, this year may be different. This year it has been hard to get a land-rig unless you contracted six months in advance.
Also, the University of Texas lands is to have a land based lease sale this month. UT has this sale only twice a year. Results? I will be glad to post as to the outlook of land drilling. These leases are for a term of 5 years. Other than rig count (short term), this is a potential barometer of future outlook.
Also, don't forget the US did replace our natural gas reserves last year (up only 0.8%) However, we saw an increase in drilling for this reserve by 20%. Published by the Department of Energy. This year drilling was expected to climb another 20% for natural gas. If I am not mistaken, I shall verify that year to date we have not replaced our usage.
Please read "Volatility of Oil and Natural Gas Prices" in the following report from Patterson Drilling. This answers many questions about the industry..
sec.yahoo.com As the world turns in regard to oil price, so does the oil industry.
As I mentioned before, the fundamental outlook is somewhat difficult to transform into stock valuation.it is a very common mistake to paint an industry as large as the oil industry with a broad brush.Some sectors-deep water drillers will continue to show large profits but watch for the broad brush effect..should we experience a land driller slowdown. Should we see an increase in oil price, the first to benefit will be the oil companies.
Almost forgot,, the Y2k question,,,,,I don't know how the problems with the production platforms will be handled. But I know with my production where a chip is involved that I can manually override the circuit and control with a valve or the pumping unit with a switch. This only pertains to my production.
Doug |
