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

To: Dennis Roth who wrote (130698)	5/3/2010 8:58:23 PM
From: Dennis Roth	2 Recommendations Read Replies (1) \| Respond to of 206187

An OTC Unlike Any Other Logging While Investing OFS Weekly Analysis 41 pages, 33 exhibits Link: sendspace.com An OTC unlike any other: The oilfield services industry heads to the Offshore Technology Conference (OTC) in Houston, a trade show that last year drew 68,000 people (and that was with global recession and the H1N1 virus). We are headed there as well as Credit Suisse hosts its 18th investor event coordinated around the trade show. Yet the Macondo well disaster and subsequent oil spill is casting a long shadow over OTC, and we expect it to be both a fascinating and sobering few days. Last week we largely focused on the individual actors: Most of the market focus last week was on the individual companies involved with or potentially responsible for the spill (BP, APC, RIG, CAM, HAL); our own research focused largely this way as well. Please see our team notes: RIG: What’s the Financial Impact on the Horizon?, dated April 26 and OFS: Macondo Well Tragedy Slams Services, dated April 30. But the potential “political” response to the disaster could have a significant impact on offshore activity: But as the spill widens, so does the basis for concern, regardless of issues of fault, negligence, liability, etc. The market got an errant scare early on Friday as the press misinterpreted Obama Administration comments—it was reported that drilling of new wells was to be halted, when the Administration was referring only to its recent proposal regarding drilling in new areas of the Eastern Gulf of Mexico and off of the Atlantic Coast. But the confidence/comfort level with offshore drilling is likely to be badly damaged in the U.S.—is it just a matter of time before additional restrictions and/or burdens are imposed? Likewise, we can at least imagine there may be agitation in other countries seeking additional assurances. And so it seems possible that offshore development is hampered, with potential costs for IOCs and the oil services industry. A positive read-through for onshore oil...and more interestingly natural gas: In a scenario that includes restrictions on offshore activity, we imagine higher oil prices ensue and the logical OFS beneficiaries are oil- levered onshore service companies. But if indeed this disaster is the catalyst for the U.S. thinking very differently about its sources of energy, then the implications go beyond where to source oil. In this different mindset, renewable energy gains additional momentum. But so too, we imagine, does natural gas. With evidence continuing to mount regarding efficiency of production from the shales, we would expect more earnest discussion regarding gas providing (a lot more of) our nation’s transportation fuel—this of course would have clear positive implications for U.S. exposed services.