Thanks for the excellent floater background. I think the leverage will work more off the nominal valuations that the public stock market is pricing the deepwater assets at (well below NAV). The second element of the leverage I spoke of relates to pricing for part of this fleet. That move will not be from 150k to 180k, but from zero to 150 or 180K. DO has nine semis staked right now, and are building a couple other mothers. RIG looks like they have about nineteen ultras and semis stacked. I'm not so sure GSF fits (74% jackup, 18% semi with two 7500' semis being constructed)) the deepwater category yet, although might be a good compromise candidate for investors who desire a smaller deepwater exposure. I recently bought all three though to cover my bets.
Since I believe we are at stepped up prices (30+ /5+) for some time, and with the real possibility for "emergency" spikes, I'm anticipating some "surprise" leverage from these. Maybe one aspect we should be watching are the new rates on some the contract expirations coming up. Do you have a source for this? Let's zero in on (RIG) Richardson, operated by KMG in GOM, expires 2/03, Cajun Express (RIG)operated by Murphy in GOM, expires 1/03, or (RIG) Leader, operated by BP in GOM, expires 3/03.
The reason for the ramp up IMO will be that the majors and supermajors are going to have to get back in the game: big time. And they aren't going to screw around drilling for small fields in Alberta or Oklahoma, they going to have to hunt some elephants. Obviously deepwater is where they can still find meaningful production, and oil will be in the equation. There is going to be more and more talk about energy needs and emergencies, especially when Kirkuk and Rumilia are torched, so the political pressure will be on.
To Que on my 2400 refill prediction: just a back of napkin SWAG based on my assumptions: normal weather, meaningful supply erosion (maybe 3%), ability to do some switching, and a pickup in activity, etc. Well, I now think even I was too high: winter's been cold, switching is very problematic (in fact it may be the reverse because of the need to import oil: my Iraqi scenario has been adequately stated and Venz isn't going to be resolved), little activity pickup, and if it arrives it will be too late, and I'm really shocked about the Canadian levels, no help there. I've never seen a more perfect storm develop, and people are still in a TOHOE state about it. |
