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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 (177526)	4/6/2013 7:21:00 AM
From: Dennis Roth	4 Recommendations Read Replies (2) \| Respond to of 206161

Oilfield Services Credit Suisse Comment Things We've Learned This Week - 04 April 2013 Activity in the Marcellus has been strong and improving with the uptick in natural gas prices. We’ve heard that the top land drilling players are operating at peak capacity in the area. The Marcellus shale is now the largest producing natural gas basin, producing 7 bcf/d, about 10% of total US consumption. Precision Drilling is working at peak rig count in the basin and we believe the company holds the #2 market share there. Activity. With the Q1 rig count reported and based on the historical seasonality of US drilling activity, the rig count shows to be down 5.2% this year which compares to our October 16, 2012 forecast of down 4.8%. This indicates an increase of 130-170 rigs to the active list through year-end. No Couch Jumping, but...while sentiment has definitely shifted to the negative since right before last month’s big conference, we see some of the exuberance fading but none of the conviction. In polling several large cap service companies, nothing in the first quarter would seem to indicate a slashing of earnings estimates for the remainder of the year. Earnings revisions for HAL and BHI have been positive according to Bloomberg. SDRL Safety Scrutiny: The Petroleum Safety Agency found a series of non-conformities with SDRL semi West Hercules, the company has been given until April 15th to respond to the findings. The rig was expected to commence drilling in April but might be at the Westcon shipyard in Norway longer than expected – potentially stalling drilling until this summer. GE Oil & Gas announced this week that it will spend $110 million to open a research lab in Oklahoma City to study ways to improve the extraction of shale gas and tight oil, including hydraulic fracturing and horizontal drilling. GE will hire as many as 125 engineers at this lab. US GoM Permitting: Offshore development permits in Q1 were 112, up 7% QoQ and 2% YoY, while new field permits declined to 19 in Q1, down roughly 30% QoQ and YoY. We do note that 2012 new field permits were up 138% from 2011. With new field permits down and revenues expected up 20%-25% this year, the transition from exploration to development is increasingly obvious. UK Shale. The UK government continues working toward offering tax breaks to encourage shale gas exploration and production. The UK government lifted a temporary moratorium on hydraulic fracturing in December. “Shale gas is part of the future, and we want to make it happen”, said UK Chancellor George Osborne. The proposed measures could make onshore shale exploration more attractive to oil and gas companies already operating offshore UK since the proposed tax breaks could take the form of new field allowances or existing incentives which allow for write-off of costs. Reports say it is possible the proposed incentives could be finalized, passed by Parliament, and implemented sometime in 2014. Long term positive development. Nat Gas. We have written about operators using produced natural gas to displace diesel at the well site. By laying gathering lines ahead of drilling in areas where it is confident it will have gas production, Apache says it is able to displace diesel with gas early in a drilling program. It is also beginning to use compressed natural gas and LNG in frac jobs. Using field gas for drilling, the company saves about $125,000/well. Confirmations are nice. Transocean Idles UDW Rig. The Transocean GSF Explorer, rated to 7,800 feet, remains idle offshore Singapore/Malaysia where it continues to be marketed. It has shown up in multiple tenders in Asia, as well, West Africa. This rig has history. Some think it was built in 1998. That would be wrong. It was built in 1973 by the CIA who enlisted Global Marine and Howard Hughes to try and recover a lost Russian nuclear submarine. In today’s dollars, the rig would cost $1.8 billion to build. CKH’s...Tug Aura (under construction) was launched this week and is expected to be completed in May. The Atlas (2nd tug of two tug package) is also expected to be delivered in May. Each tug has a 50 ton bhp. Eurasia Drilling had its year-end conference call this week. We believe that Eurasia Drilling is the most sensible buyer of Weatherford’s (WFT) 65 international land rigs. Although we did not hear major acquisition plans on the call, a few topics of interest arose. Horizontal drilling has been diluting margins because of the involvement of third party service companies. Also, the company banks in Cyprus but has been able to avoid appreciable taxation charges. Download at the bottom of This Page