Upon doing some reflection on the drillers, it seems to me that the pivotal remarks made about the sector in the last few months came from Luigs on CNBC . He stated that sustained [3 months] $15 oil would have a negative effect on the sector's bottom line. Well, here we are after 4 months of $15 oil...land rigs are stacked, E&P budgets cut from the smaller companies, more rigs coming on-line in the next 1-2 years, more discoveries due to technology, recent lowering of tensions with Iraq, Iran, continuation of Asian Flu, oversupply of crude inventories, general market correction imminent, etc...Not a bullish scenario for the next 3-6 months IMHO.
I tend to respect the straight-forward tone of Luig's remarks, and know that he spoke from many years of hardened experience. Going forward the outlook, if not downright pessimistic...surely should cause concern among both long & short term investors. |
