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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: mopgcw who wrote (54547)	12/2/2014 4:30:24 PM
From: Jurgis Bekepuris	Respond to of 78476

I do consider debt levels, that's why there's D/E in the table. :) I think that SDRL is overlevered. If downturn is short, you're fine probably. If downturn is long, you probably gonna get a takeunder from Fredriksen in the best case. I am not sure the rig mix matters much. People said it does, but actually there's overcapacity in the high spec deep water rigs as much if not more than in shallow water jackups. If you went for deep-water only, you would not buy ESV. ;) Newer vs older rigs - well, again, I am not sure it matters. People say it does and then the newbuilds sit without contracts when older rigs still work. Also if you have tons of depreciated old rigs and throw off a bunch of FCF then you can just wait for bottom to pick up discarded newbuilds cheap. I think PGN had a right idea in this area, but they jumped in too early with Prospector purchase. This is where I don't particularly like ATW and RIG (and couple of others probably) who bought or ordered rigs this year at top prices. Contract rollover - sure. This will matter a lot if the downturn is long. So will the debt maturities.