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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (121419)	6/5/2009 11:49:50 AM
From: JimisJim	1 Recommendation Read Replies (1) \| Respond to of 206110

Paul, it's almost 1/3 of their (RIG's) deepwater fleet, which is significant, but the real point is that the entire market for deepwater rigs softens if PBR replaces, say, 2/3 of the rigs they currently contract with their own... in which case, even deepwater fleets and operators become "surplus" capacity... if this were to happen, though, I suspect RIG would feel less pain than DO or others -- DO's fleet is getting long in the tooth and others just getting their feet into deepwater might find it tougher to get started as their newbuilds come to market with nothing to do... All still a pretty big IF since it is unclear just how soon PBR would actually be able to deliver on their stated desire to build/supply their own capital equipment for E&P -- in other words, won't be an issue for at least several years, if then... I was merely thinking/speculating out loud on one possible kink in the deepwater space. Jim

To: Paul Senior who wrote (121419)	6/5/2009 12:18:38 PM
From: JimisJim	2 Recommendations Respond to of 206110

Snip from Investor Daily wrt PBR and RIG... "Like oil producers, services stocks are a varied bunch. The major divide is between firms that provide technological expertise and maintenance and ones that drill for oil. Among drillers, there are companies that work primarily on land, as well as ones that drill in shallow, mid, and deep water. Right now, most managers prefer deepwater drillers because of their visible backlog and earnings growth potential. "All of the incoming demand now is for advanced, deepwater rigs," says Robert Stimpson, a portfolio manager at Akron-based Oak Associates. Most incremental demand, he says, is coming from Petrobras, the Brazilian producer that's expanding its operations in complicated offshore sites. Among Petrobras' contracted drillers, MacKenzie likes Transocean. "A much bigger percentage of Transocean's fleet consists of ultra-modern rigs compared to Diamond Offshore," he says. Transocean spent $2.2 billion on upgrades last year, nearly double the year before -- a move that looks prudent now that its high-tech rigs are in demand. The company is trading at a price to earnings ratio of seven, while Diamond is priced at nine times earnings. MacKenzie expects Diamond to suffer because of its participation in the softening midwater market." But then, the author jumps off the deep end, IMO: "Investors with more risk tolerance should look at shallow water drillers like ENSCO, wrote Deutsche Bank's Mike Urban in a recent note. While the deepwater growth story is still strong, he write, it's time to look for stocks that are more likely to benefit from a sector-wide recovery." And then regains his footing: "Fewer analysts are as optimistic about land drillers, which have exposure to low-priced natural gas. Stocks like Nabors and Patterson-UTI soared in recent months, but they were bolstered by short-term trading, says David Havens, an analyst at Sterne, Agee, & Leach. "Fundamentally, they don't exhibit the best growth prospects," he says."