Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Dennis Roth who wrote (125400)	11/9/2009 4:43:07 PM
From: Dennis Roth	2 Recommendations Read Replies (1) \| Respond to of 206184

Logging While Investing OFS Weekly Analysis Middle East Signs 40 pages, 32 exhibits, 570 KB Link: sendspace.com Excerpt: Middle East Signs. Last week in Iraq saw the signings of three 20-year service contract agreements in Iraq – BP/CNPC for Rumaila, Eni/OXY/Kogas for Zubair and XOM/RDS for West Qurna (in West Qurna's case, the consortium beat revised offers from consortia led by Lukoil and TOT). As has been well publicized, BP/CNPC was the only consortium to agree in the initial June bid round to the $2/barrel payment terms. Clarifications have helped the other two consortia reach agreements after the fact. The progress on Zubair and West Qurna, and the apparent progress on a parallel strategy of direct negotiations regarding shorter (3-year) and smaller scale EPC contracts, are building a sense of confidence regarding the upcoming second licensing round expected to be held in December. However, there remains at least some uncertainty about the process as members of the Iraqi Parliament are still questioning the legality of such contracts – Oil Minister Shahristani is appearing before Parliament tomorrow to field questions. Meanwhile, Saudi Aramco moved quickly from bid submission in September to selection of Halliburton to provide the Kingdom's first IPM contract, an 3-4 rigs, 153-185-well, five year program in the Ghawar field. Aramco's moves come as Saudi's rig count slipped in September to a year-low 77 rigs according to the M-I rig count, down from 104 a year earlier, although its issuance of formal tender documents two weeks ago for a newbuild jackup rig and commentary about shifting resources to natural gas developments, along, ultimately, with stronger oil prices, have yielded some optimism about recovery. Earnings Wrap. Of the 52 companies we monitor, 45 have reported earnings: 58% have beat consensus estimates (by >$0.01), 18% have met (+/-$0.01) and 24% have missed (by <$0.01). See Exhibits 1-4 for analysis and please see our note out this morning Benefits of Self-Help for thematic discussion. HERO Upgraded to Outperform. We upgraded HERO shares to Outperform from Neutral to reflect improving demand for GOM jackups and inland barges as well as some intriguing optionality associated with the company’s liftboat segment. Our 12- month target price moved to $7 per share from $5 per share. Our take on the group. As we have for some time, we remain wary of the U.S. landscape for much beyond a trade to take advantage of the very near term pick up expected in U.S. activity. But the global 2010 outlook for OFS continues to trickle more positive. As this earnings season appears to be demonstrating, including via the demand step-up witnessed in the jackup market, the tone on international spending is improving and we take greater confidence in an outlook of flat-to-modestly-up spending. The companies are generally exhibiting solid cost control, which lends itself to some upside bias to our generally still-below-the-Street estimates. However, we continue to struggle, with how much of this better outlook has been reflected in shares for some time and thus we remain very selective. In diversified service large caps, HAL (top pick) and SLB appear well positioned to outperform. And we continue to prefer free cash flow generative drillers with healthy deepwater exposure including RIG and NE.