Sarge,
I agree with you, the factors that you point out are relevant, and effects a block of the investing public. Part of the reason I took the tack I did is because of my perception of how the institutional investors look at things. I think they want at least a recent history of earnings growth, combined with a good prospect for future earnings growth. The deepwater water drillers all have new rigs reporting for duty, with good long term contracts, over the next year. Their earnings so far are good, many of them showing year to year increases last quarter. This includes the related service companies. If oil holds in the $15 dollar area, with upwards growth expected, the contracts coming up for renewal the rest of this year should get good rates. I believe RIG just renewed one last week at a higher rate. The oil companies cannot afford to lose the rigs, that would screw their long term plans for deep water development. Another 3-6 months though, and they would have gotten hit hard.
I took a slightly different angle than you, trying to anticipate the institutional investors, rather than individuals. The institutions seem to have a much slower reaction time, because they are more risk adverse, unlike us on this thread, who believe no guts, no glory. We can make more than them, but they put up with less risk.
Mike |
