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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: John Koligman who wrote (31521)	6/17/2019 9:58:34 AM
From: JimisJim	4 Recommendations Recommended By dealmakr Graustus John Koligman Spekulatius Read Replies (1) \| Respond to of 34328

All bets are off for those old offshore friends (RIG, ESV, DO)... of the three, RIG and ESV are the best run outfits and ESV at one time was a very good DGI performer... RIG has the biggest and most diverse fleet (much stacked now) and ESV was building some very interesting latest gen floaters for the Brazilians and for various outfits off W. Africa. However, this is the worst bust in general in my lifetime and definitely the very very very worst for the UDW drillers and even just regular DW these days -- the costs of building what would have been required to go after some very large, very deep oil and gas hundreds of miles (furthest I was ever offshore in 10-15 thousand ft of water was 250 miles -- I'd been farther offshore, but in much shallower water) are mind boggling. Takes several years to build one and several billion to equipment it. Not going to happen at today's prices so they (offshore drillers you follow) pretty much just running out the clock now, incrementally cutting day rates where possible or just decommissioning and towing to port somewhere if they can't redo a deal with former lessees and I know of only one or two floaters (both FPSOs which have a decided advantage in bad markets because they are so much more mobile and quicker both as drilling and production platforms) even in the commissioning stage right now. If/when things turn around for these guys, remember that BEFORE the bust, RIG's fleet quality was only surpassed by SDRL and they had more types tailored for more diverse applications -- remembering that RIG was largely a conglomerate of 4-6 distinct smaller outfits that were gobbled up in the 1990s one at a time like Pacman. ESV was the smallest in terms of DW and UDW with just a handful of rigs in that space at all -- which may have been a good thing considering what happened, but they were getting very aggressive in UDW and were on the right path, until... and they *were* a definite DGI play, but alas... and DO was probably in big trouble before the bust -- they had a very large fleet of stinkers and rust buckets and were having a hard time competing until it didn't matter any more. To tell the truth, I stopped even following them. Instead, NOV is my leading indicator for that entire offshore segment -- when NOV's order book rates improve and stabilize, they're backlog for capital equipment will grow... that is when that segment will be ready to recover -- hard to imagine it, but then it was hard to imagine something like a bust this deep and long, too. But NOV owns 80% of the offshore capital equipment market and a growing percentage (from very low, like 5%) of the land, esp. shale drillers because the only real difference in equipment needs between shale and UDW is platform/floater or pad; slightly less raw HP in the AC top drives and no need to store everything and everyone in specific ways in the shales vs. UDW. As for survivors in this segment, DO was already sinking before the bust -- haven't even looked at their status, because why bother? RIG and ESV are/were so well run, I think they have the best chance to make it as long as the bust doesn't go another 5 years; but both -- if they emerge -- will be much smaller outfits and have a lot fewer market opportunities. At the moment we just don't need much of what is produced in those UDW fields -- note I did NOT say we don't need them at all, and there are a surprising number still working -- it's all about what sort of oil they are producing and the demand from refiners for specific grades of crude to make their operation as cheap as possible -- there are some grades of oil that are only found in certain offshore fields and the refiners always make sure to be able to handle anything out of the GoM. The U.S. could open all of the continental shelf and every national park for drilling and very little would happen and only in very small specific pockets of those areas because nobody needs to pay for that E&P from scratch for some grade of oil in short supply at the refiners. I'd bet if everything in N. Am. were opened to E&P, there wouldn't be more than a half dozen or so new projects in operation 10 years from now -- maybe 15-20 years on the continental shelf offshore. Good thing I was ready and going to retire anyways, because otherwise, I'd be a greeter at WalMart right now and I read that WalMart is going to get rid of all greeters soon.