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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (37714)	5/2/2010 1:36:18 PM
From: Jurgis Bekepuris	Read Replies (1) of 78468

Spek, If you believe that there will be consequences for drilling in the Gulf which will affect dayrates, probably dramatically, then your second suggestion of buying another driller that suffers collateral damage is wrong. It is only right if RIG will be found guilty for the rig explosion. (Apparently from Dale's thread RIG is now being contracted by BP to drill the shutoff wells, so it's not really losing business or reputation). I would have to look at the rig and revenue distribution, but buying NE may expose you more to the dayrate decline than buying RIG which is (from what I remember) very geographically distributed for their deep water drilling. Of course, RIG made a stupid investment decision of buying GSF almost at the top, which exposes it to rather horrible shallow water drilling economics and probably much more GoM. Overall, I'd rather buy pure play deepwater drilling investment, but there is no such thing in US market after RIG bought GSF. RIG was the cheapest based on deepwater exposure before the blowup and it is even cheaper comparatively now. I do appreciate Mark Marcellus' input that their long term operational quality should be considered before making investment decision though.

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