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Gold/Mining/Energy : Big Dog's Boom Boom Room

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From: Dennis Roth	3/22/2011 8:57:47 AM
	1 Recommendation Read Replies (3) of 206151

Transocean Inc (RIG) Shell's Gets First Approval for New Exploration in the Gulf citigroupgeo.com Progress Continues, and Faster than Many Expected — The Bureau of Ocean Energy Management approved the first oil and gas exploration plan for the deep waters of the Gulf of Mexico since the Macondo well blowout in April 2010. The plan submitted by Shell calls for drilling three new exploratory wells using Noble's Jim Thompson rig. Permits to drill the three wells can be issued now that the plan has been approved. This breakthrough comes sooner than many expected. Shell Will Apply for Drilling Permits Based on its Approved Plan — Until now the BOEMRE had approved plans and issued permits only for re-entering and completing wells that had been partially drilled before the moratorium. Shell's plan calls for drilling new wells and it employs a well containment system developed by a consortium of oil companies called the Marine Well Containment Corporation. A containment system developed by Helix Energy has been approved previously. Environmental Groups Unlikely to Mount a Successful Challenge — Various environmental protection and conservation groups have stated that they will challenge new drilling under the National Energy Policy Act (NEPA). In our view, legal challenges will not succeed or meaningfully delay the resumption of drilling in the Gulf. While the risk of further delay may keep some investors on the sidelines, the multiple evidences of a broad global upturn in demand for deepwater drilling services is the basis for our positive outlook for the deepwater drillers. Reiterate Buy on RIG, NE, DO — We continue to believe that offshore drillers Transocean, Noble Corp., and Diamond Offshore are the companies that most directly and immediately benefit from growing demand for deepwater oil and gas drilling services. They have the greatest exposure to the Gulf of Mexico and will benefit most when drilling rebounds. We rate these stocks Buy-High Risk (1H).

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