Slider, Re: FGI - By no means do I consider your post to be anything but well thought out and hard bitten analyses based on current conditions. In fact I am on the verge of throwing in the towel on Big Oil offshore capex spending - for this year! New spending in the GOM by the biggies just doesn't appear to be happening. I do however believe this condition to be VERY temporary, and that "pent up" demand is starting to build. The large offshore fields are the only fields that big oil can drill in that make economic sense to them. The last big land oil fields that the majors would be really interested in exist in the ME. OK, MAYBE Russia. But Russia is a double edged sword, is it not? Now, if your case against offshore drilling (and subsequent need for new rigs) is built on the assumption that ME fields will be opened up, then, your case becomes utterly compelling. If they are not, then the majors have no other place to go to replace reserves in the size that would interest them. Big oil companies can only "just pump" for so long. When, not if, they do begin to drill offshore in earnest again, imo it will be "with a vengeance". The $64,000 question is WHEN! I thought sooner - you say later - so far YOU WIN. But consider this, every day brings us closer to the new budgets. <VBG>
WRT the last cycle. As you know, it has been my contention that this oil cycle will outstrip the last. My arguments have been largely "soft" ones and secular. But now the "facts" are starting to come in. Every, and I mean EVERY professional oil analyst (Abby Cohen & Don Wolanchuk excluded <HUGE BIG GRIN>) has severly MISJUDGED the economic recovery in developing countries. IMO it ain't rocket science to understand that these economies will drive most NEW oil demand and subsequent capex expenditures going forward. On a historical basis, interest rates are still incredibly low. I can remember when I would have given my left Rocky Mountain Oyster for "hat sized" bond yields, much less 6%! The spending wave demographics are solidly in place and ARE firing growth in developing countries. This will IMO WITHOUT A DOUBT drive energy demand far past the last cycle. This is why I continue to view the analyses coming from even the sharpest individuals with a jaundiced eye, and why I hope to double down on FGI some time in the future, and buy the rest of the fabs, if I am able. IMO there just won't be enough rigs available to supply swelling demand. Remember, Asia and the rest on of the developing world, is going through a major secular shift, from agrarian societies, to industrial ones. This is process will, IMO, resemble that of the "West" 60 to 70 years ago. Energy demand from these areas will, IMO, outstrip the "Western Economies". The Pie Shrinking? Au Contraire, Mon Ami, the pie is increasing every day. It is a pie called DEMAND. Soon even the major oil execs will get this. Conventional economic theory does NOT include demographic cycles as much as it should, this why so many economists are utterly astonished at the length and breadth of this U.S. economic cycle. Oil company exec. probably use the same faulty models to project demand. It is my view that people just don't understand the power of the whole world being in a demographically based spending wave upcycle. This cycle will make the last one look like a piker. Will drillships and "technology" make DEEEEP water rigs obsolete? Maybe, I think not. Perhaps The RigDog can shine his professional doggy light on this one for us. I'd love to hear the wonderfull oil pros on the board weigh in on this one. One thing it won't make obsolete are tankers, ferry boats, yachts, coast guard vessels, barges, and on and on. Korea can't make 'em hall. Plus, currency valuations are starting to favor dollar based industrial manufacturers. Hey, I'm doin' "the vision thing" again. <g>
A lot of the debate about the fabs reminds me of the same arguements I heard about offshore drillers back in the winter time. Don't buy value - book value is meaningless when nobody wants a rig, don't buy your OS stocks until the majors increase capex, draconian cuts, death spiral, $5 dollar oil, 1 800 BANKRUPTCY.... etc. and so forth. Well, you know what happened, just check the recent prices of FLC, DO, PDE, RIG, ...etc. IMO some of the best VALUE in the patch is now to be found in the fabs. The tremendous amount of short interest in FGI can also be viewed as a powerful contrary indicator at a market extreme. Unless FGI goes BK most of the easy short money has been made. IMO those shorting now, are real Johnnie Come Latelies trying to squeeze a few nickels out. This is turning into a totally one - sided market. When everybody trades one way I look to trade the other. Clearly, I was wrong in timing my purchase of FGI. The fabs, and seismics have been the only stocks in the patch that have given me any trouble. They will turn, just you wait. We've got to be near the bottom - everybody HATES 'em. Especially Wall Street.<g> There's "Blood in the streets." That's what the Bulls nose smells.
Right now I'm mainly in E$P's, and assorted OS co.'s that look good technically. If I am fortunate enough to make some money here I will begin to seriuosly buy the FABs. I will average in and use time to MY advantage. I am at the shorter end of that three - nine month buying time frame you mentioned.
Ever your humble and obsequeious servant <TITANIC BIG GRIN>
Bull
PS. Yeah, sometimes I get emotional, must be my "inner child" erupting! <g> But damn, if we can't have a little fun from time to time, why do it. Just think what would this thread would be if totally populated by green eye-shade types? BOOOOOORING! |
