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Post by Deleted on Jun 8, 2020 12:13:49 GMT -5
CNBC TV: Oil stocks up, drillers are starting to drill
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Post by bjspokanimal on Jun 8, 2020 16:06:01 GMT -5
@ blitz; There was a bit of an expose' on bloomberg earlier that highlighted the extent to which market pros have been wrong about the market recovery. It was nice that they agreed with me that it would be slower, or a double dip in the market, but that doesn't negate the fact that we were all wrong about that together (excluding RIG, that is). Normally, I'm not one to chase a trend rather than bank on my convictions (of the double dip, in this case). But in this case, I'm glad I did to a certain degree. RIG, however, was a hang-10 from the start... never a doubt... especially with motley fools on all sides of us screaming BK about it just like they did with LVS back in early 2009.
The concept of "don't fight the fed" wasn't bought off on by the pros, which made sense since the fed had few bullets and they seemed like spit wads in comparison to the magnitude of the Covid shutdown and gargantuan layoffs. I think the mistakes (in hindsight) were an under-appreciation of the over $3 trillion in fiscal stimulus. Take PPP, for example... for every shut-down restaurant that needed it badly, there was a hughesnet dealer, doing a land-office business setting up people to work from home who received PPP as a pure windfall.
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RIG
Jun 8, 2020 20:17:54 GMT -5
Post by Deleted on Jun 8, 2020 20:17:54 GMT -5
Market makers (criminals) ran RIG (closed at $3.75 during normal market hours) up to $4.10 AH, was watching it on level 2. Rig closed AH at $4.10.
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Post by bjspokanimal on Jun 8, 2020 20:43:18 GMT -5
Market makers (criminals) ran RIG (closed at $3.75 during normal market hours) up to $4.10 AH, was watching it on level 2. Rig closed AH at $4.10. Same thing happened with LVS in March of 2009, taxx. Anytime you've got an industry's rule-maker company in a position where Motley Fools all over the place are screaming bankruptcy... and then the market begins to believe that bankruptcy is unlikely... moves like this will happen. Nothing moves a stock like the removal of fear. In 2009, we had Sheldon Adelson backstopping the company. Today, we have OPEC production cuts, thousands of shut-in shale wells, and demand that's in the early stages of recovering quite rapidly.
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Post by Blitz on Jun 9, 2020 6:48:56 GMT -5
Ron Barron just said on CNBC this morning that retail investor volume has been 3 1/2 times normal volume and these investors go all in and all out on a whim even in after hours trading same with algorithm traders.
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RIG
Jun 12, 2020 16:10:41 GMT -5
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Post by bjspokanimal on Jun 12, 2020 16:10:41 GMT -5
Ron Barron just said on CNBC this morning that retail investor volume has been 3 1/2 times normal volume and these investors go all in and all out on a whim even in after hours trading same with algorithm traders. Transocean is a classic example of a tug-of-war between "fear" and "potential". We all know the fear part. Motley Fools write horror stories several times a week these days and there is no, real, healthy company in this industry... nor a lender or financier who wants to bankroll any of them. If crude oil stays below $40 for a until the end of next year, it's going to be ugly. On the potential side, Transocean's ~$20/share book value reflects the best drilling fleet in the world, and the largest. Transocean is also the healthiest of the unhealty offshore drillers and would likely be the last company to go under in a catastrophe-case scenariori... or the last one standing if the rest go bankrupt right when the industry turns and the next drilling boom begins. So, we've seen what fear can do. Transocean actually, unbelievably, sold for $.80 per share in May. And, we've seen what a little hope and a rising oil price trend can do for the world's most dominant ocean driller, when it suddenly spiked to almost 1/5 of it's book value early this week. Finally, I can't resist the "water-behind-the-dam" analogy. Every day that oil stays cheap and nobody drills is yet another day that the world rapidly depletes current oil reservoir reserves and leaves the industry less able to supply oil to the world should demand again approach 100 million barrels a day by next year. Drilling is currently at an all time low... NOBODY is finding new oil, but the world still consumes 80 million barrels a day. The longer this goes on, the more enormous the next oil boom will likely be. The question is... will Transocean survive to enjoy a future of $500,000 to $700,000 per day drillship day rates during the next oil boom without an equity-destroying chapter 11 reorganization like the one that impoverished so many Seadrill shareholders last year? I'm 89% confident that they will be.
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RIG
Jun 12, 2020 16:32:20 GMT -5
Post by Blitz on Jun 12, 2020 16:32:20 GMT -5
I luv your 89% number... it’s very exact. That said, as you said, if I may opine... The cure for low oil prices is... low oil prices. As you say, it is survival of the fittest.
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RIG
Jun 24, 2020 10:54:38 GMT -5
Post by Deleted on Jun 24, 2020 10:54:38 GMT -5
The last few days as Brent was going up Rig was declining. Rig was at $43.91 2 days ago.
Now Brent is down $4 in 2 days (Brent now at $39.96), OUCH!, and Rig is in the $1.80 range.
There have been big bids/buys on Level II all morning as Rig's stock is declining.
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RIG
Jun 24, 2020 11:04:05 GMT -5
Post by Deleted on Jun 24, 2020 11:04:05 GMT -5
Rig now in the $1.90 range, had a low of $1.86 so far today, and is trying to recover?
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RIG
Jun 24, 2020 13:33:41 GMT -5
Post by bjspokanimal on Jun 24, 2020 13:33:41 GMT -5
Here is a pretty informative article that sizes up the offshore drilling situation. Note that Transocean isn't mentioned among the troubled drillers... not because RIG is not financially challenged, it is, but likely more because it is arguably the least challenged of the 7 major drillers. That's refreshing, given how much the Motley Fools have been trashing Transocean, despite it's relative financial status. Still, this article points up the risks involved with contrarian, turn-around plays like this one. I would argue that it also helps to frame the "last company standing" theme pretty well too. To wit, a lot of the most troubled companies may be forced to scrap rigs that aren't in that bad of shape, but simply not likely to find work within 2 to 3 years. Transocean, on the other hand, may be better situated to hang on to some 5th, or even 4th generation, cold-stacked drillships and semi-submersibles with an eye on a potential boom time 2 or 3 years out... and a leg-up over competitors who had to slash their fleets too much. Here's the article: ______________________________________________________________________________________________ With contracts canceled and debts mounting, offshore oil drillers face another shakeout Liz Hampton and Nerijus Adomaitis ,Reuters•June 24, 2020 DENVER/OSLO (Reuters) - The companies that operate offshore drilling rigs for major oil producers face a second wave of bankruptcies in four years amid a historic drop in energy prices that likely will leave surviving drillers more closely tied to big oil firms. A collapse of the offshore industry will have broad impact. Drillers and their suppliers have driven innovation that has helped shale and offshore wind companies by pioneering remote monitoring and control, and last year directly generated about 25% of global oil production. The offshore services business is the worst performing of the oilfield services sector, with shares of the 10 largest publicly traded down 77% since the start of the year. Four of the seven largest offshore drillers - Diamond Offshore Drilling Inc, Noble Corp, Seadrill Ltd and Valaris Plc - have sought protection from creditors or begun debt restructuring talks that could lead to bankruptcy. Two others are reaching out to their creditors. Pacific Drilling last month said it may need to modify terms of its debt, and was seeking alternative funding in the event creditors would not accept new terms. Shelf Drilling , the ninth largest by revenue, is seeking talks with creditors over loan covenants that take effect next year, executives said. The latest offshore industry's turmoil "is going to change things in many ways," Odfjell Drilling Chief Executive Simen Lieungh said in an interview. "Existing players and the existing structures will probably not be there as today," he said referring to companies scrapping rigs. EARLY OPTIMISM FADES The sector had limped along as exploration fell due to high costs and the advent of cheaper U.S. shale. Then, a flurry of giant discoveries off the coasts of South America and Africa rekindled oil majors' interest in deep water projects and led to a boom in offshore leases two years ago. Drillers began the year predicting a recovery with oil prices at $60 per barrel. But optimism soured as the pandemic crushed demand and oil prices fell below $20 in April. This month, the number of floating rigs at work is expected to hit the lowest level since 1986 as oil companies cancel or defer contracts, said industry executives and analysts. The last downturn was cushioned by help from oil producers. Between 2014 and 2016, as crude fell to $26 per barrel from over $100, oil majors spread work among drillers to keep exploring off the coasts of Brazil, Mozambique and in the Mediterranean. That allowed drillers whose rig contracts were canceled to pick up some jobs, albeit at lower lease rates. The offshore industry was financially stronger then. Many had entered that downturn with large order backlogs and held contracts with lease rates higher than today's, said Jorn Madsen, CEO of Maersk Drilling. But with oil majors this year slashing their own spending by between 30% and 50% to preserve cash and pay dividends there is no safety net. Winners will be those companies that get debts refinanced and get through the next two years, said industry officials. Offshore service firms may need to scrap up to 200 of the about 800 existing floating rigs to regain profitable lease rates, said David Carter Shinn, head of analysis for rig brokerage Bassoe Offshore. There is little hope for a rebound in the next few years. Many oil producers are withdrawing from projects that require $60 per barrel to earn a profit, concluding it could be years before they see that price again. Chevron, Exxon Mobil, Petronas and Royal Dutch Shell ended drilling contracts early this year to save money. "Higher cost production in our industry will be shut in and projects will be delayed," said Rick Fowler, chief operating officer at U.S. offshore oil producer LLOG Exploration. Chevron said it will limit offshore work to fields that connect to existing infrastructure rather than start new exploration. Exxon, BP, Total and Shell declined to comment or did not reply to requests for comment on the impact on their drilling plans. The abrupt halt of exploration has been devastating to drillers. They are writing down billions of dollars on the value of their fleets. finance.yahoo.com/news/contracts-canceled-debts-mounting-offshore-095214364.html
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RIG
Jun 29, 2020 14:11:25 GMT -5
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Post by bjspokanimal on Jun 29, 2020 14:11:25 GMT -5
With the angst I'm seeing over Chesapeake, I thought I might offer up a few thoughts I'm having on oil (the commodity) and RIG. What's interesting to me, is that the price of oil rose to it's current level (~$38 WTI & ~$40 brent) and then leveled off. The "experts" offer different reasons for that, but one that I've surmised is that that is the price of oil most quoted as being the price that determines whether or not it's economical to pump oil in the more prolific shale formations. Thus, regardless of supply and demand, week in and week out, $38 WTI ensures that it's a tough decision whether to pump or not. I'm hearing that some of the most hard-up shale producers are re-starting their most prolific pumps (those servicing the newest and productive wells) to ensure cash flow and stave off insolvency, but leaving their older, more depleted wells shut-in. The bigs, like exxon, etc, however, are setting a higher bar and not selling as much oil at break-even prices, knowing that they can sell it for more down the road and do OK until then. Most importantly, the trajectory of demand, particularly for gasoline, is upward, but not yet back to normal. To see this, click the following link and scroll clear to the bottom of the page: www.eia.gov/petroleum/weekly/gasoline.phpPeople sometimes forget that oil is an economically "in-elastic" commodity. By that, I mean that as the economy slowly re-opens, the one thing that most people are going to do before they start doing other things is that they're going to start driving their cars. In fact, some people are driving now when they might have taken trains and busses before, because they want to socially distance from other travellers. Another aspect of oil supply demand that I can't get confirmed is... how much are U.S. inventories impacted by the offloading of "floating" storage?... and how much will that delay the eventual fall in reported U.S. inventories. By that, I mean that we know when Russia and the Saudis were flooding the market last March, virtually every tanker on the planet was filled and moored offshore with "floating inventory", which doesn't show up in U.S. inventory figures. My thinking, is that anytime over the past 3 months that onshore, U.S. storage capacity has become available, these tankers are going to dock and fill that capacity, because floating storage is pretty expensive. The question is; how long is that a factor before tanker traffic is normalized and supply-demand becomes a more normal read? Finally, when I consider the likely impact on Transocean if WTI oil prices remain in a $38 to $40 range for an extended period of time, I consider how large, deepwater, offshore development operations are managed by producers vs shale or conventional, on-shore field development. Shale drilling is generally the most "expedient", so it's generally the first to be curtailed in a market like this one. Shale wells deplete very rapidly and must be constantly drilled and worked-over to maintain production levels. Shale players are also the most indebted and under-capitalized, so they can't afford to keep drilling in times like these, and just hope that existing production/cash flow, and/or shut-in savings will allow them to stay afloat. Deep water offshore projects are typically multi-year in duration and involve large, conventional oil reservoirs. They are usually developed by bigger, well-capitalized oil companies like Exxon-Mobil, Chevron, Shell, BP, large sovereign country operators like CNOOC or Petrobras, etc. These companies are not immune to the oil slump, but mostly cut capital expenditures on quick start/stop shale plays and other projects that are much easier to re-start than a major, offshore project. Major deepwater projects also involve oil that'll come to market a year or so out, so it's not in the budgets that it's expected to be produced during the current, depressed oil pricing era. Finally, Transocean not only leases deepwater/ultra-deepwater rigs over 3 month to as much as 4 or 5 year contracts, but Transocean's status as the biggest and least-endangered driller in the offshore industry also allows the company to require stiff, early-termination clauses to their contracts that weaker offshore drillers can't match. The Transocean CEO discussed these clauses in detail in their recent Q1 report. Granted, the company said during the Q1 report, that they were accommodating contracts with some "suspend-and-extend" provisions, but they also said that there were next to no situations where producers were choosing to fully cancel contracts and pay a termination fee... at least as of early April. There are, of course, contracts that end and are not renewed and the company suggested that in such cases, they would determine cold-stacking rigs thus affected on a case by case basis. My conclusion, is that $40 oil isn't too bad of a place to be, for now. Why?... because that price still keeps a lot of onshore production shut in and may compel another extension of OPEC cuts, but it should also allow major, offshore E&P (exploration & production) companies to continue most of their contracts with Transocean. If oil prices were to go higher, more producers would ramp up shut-in wells and look forward to restarting drilling operations in 2021, thus resulting in less total depletion in 2020 and a delay of future oil shortages that we're all hoping for with RIG. If, on the other hand, oil prices were to drop back to $25 to $30 per barrel, major oil companies might actually begin to cancel more contracts with Transocean and increase the chance that the company would have trouble staying financially sound over the next year. Finally, while $40 oil would likely keep Transocean solvent with continued contracts, less-solvent deepwater drillers like Seadrill and Diamond would continue their current bankruptcy trajectories and lessen the chances that they would compete effectively with Transocean once the glut end and (hopefully) the next oil boom begins in a year or 2.
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Post by Deleted on Jul 2, 2020 9:29:18 GMT -5
Transocean Option Trader Bets $1.3M On Near-Term Downside : Benzinga : Wayne Duggan : Benzinga•July 1, 2020 finance.yahoo.com/news/transocean-option-trader-bets-1-184327658.htmlShares of Transocean LTD (NYSE: RIG) traded slightly higher on Wednesday, but the stock has been among the worst performers in the market so far in 2020. Unfortunately for Transocean investors, even with the stock down 72% year to date, at least one option trader made a big bet that there’s more downside ahead in the coming weeks as oil prices remain depressed. The Transocean Trades On Wednesday morning, Benzinga Pro subscribers received two option alerts related to unusually large Transocean option trades: At 11:21 a.m. ET, a trader bought 10,000 Transocean put options with a $3 strike price expiring on Aug. 21. The contracts were purchased at the ask price at $1.301 and represented a $1.3 million bearish bet. Less than a minute later, a trader bought 361 Transocean put options with a $3.50 strike price expiring on Nov. 20. The contracts were purchased near the ask price at $1.95 and represented a $70,395 bearish bet. Why It's Important Even traders who stick exclusively to stocks often monitor option market activity closely for unusually large trades. Given the relative complexity of the options market, large options traders are typically considered to be more sophisticated than the average stock trader. Many of these large options traders are wealthy individuals or institutions who may have unique information or theses related to the underlying stock. Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there’s no surefire way to determine if an options trade is a standalone position or a hedge. In this case, given the relatively large size of the largest Transocean option trade, there’s certainly a possibility it could be a hedge on a large position in Transocean stock. Offshore Drillers Under Pressure Transocean is one of the leading offshore oil drillers in the world, but the oil market has been hammered by a combination of crashing demand due to travel restrictions and shelter-in-place orders and a pricing war earlier this year between Russia and Saudi Arabia. Bank of America analyst Mike Sabella recently said he believes at least 35% of the world’s ultra-deep-water drillships will be cold stacked by mid-2021, which could help improve the pricing environment for drillers like Transocean. However, Sabella said navigating the current downturn will be difficult from a financial perspective. He's projecting Transocean will finish 2021 with about $450 million in liquidity, and the company will generate negative $50 million in 2022 free cash flow. At the same time, Transocean has more than $8 billion in debt and $600 million in 2022 debt maturities. “RIG is likely to face headwinds as pricing for floating rigs is likely to fall in '21, while leverage and FCF are a focus through '22,” Sabella said. Bank of America has an Underperform rating and $1 price target for Transocean. In June, Clarksons Platou downgraded Transocean from Buy to Neutral and set a $2.40 price target. The bull case for oil stocks has taken another hit in recent weeks as the number of U.S. COVID-19 cases has spiked in several key states, including California, Texas, Florida and Arizona. A large second wave of infections could derail the potential oil demand recovery timeline and create even more margin pressures for offshore drillers like Transocean. Benzinga’s Take The $1.3-million put purchase has a break-even price of $1.70, suggesting at least 8.6% downside over the next seven-plus weeks. The put buyer may also be anticipating worse-than-expected earnings and/or guidance from Transocean when it reports second-quarter numbers in late July. Analysts are expecting an EPS loss of 27 cents on revenue of $776.9 million, up 2.5% from a year ago. Do you agree with this take? Email feedback@benzinga.com with your thoughts.
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RIG
Jul 2, 2020 12:46:46 GMT -5
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Post by bjspokanimal on Jul 2, 2020 12:46:46 GMT -5
I saw the benzinga piece (above) this morning. To say that large, institutional options traders have good records is right. One of Hays Advisory's dozens of proven technical indicators is options, which Hays divides up into 2 categories. One category is small-block options trades, which are historically counter-correlated to the underlying stock, and the other category is large-block options activity, which are most often correlated to the underlying stock.
That said, "put" options historically present their greatest frequency and magnitude with beaten down, out-of-favor stocks that have experienced a surge off of their lows, as is true of Transocean currently. Because the stock market is the world's #1 leading indicator, moves in the market typically precede economic reality by an average of roughly 8 months. That means that an initial surge in a market or an individual stock typically occurs when the news is still predominantly bad, so options traders, who often believe such a surge to be unfounded, will up their bearish bets.
Two points: First, options traders are just that... "traders". A put buyer, like the one in the benzinga article, would be successful if he rode his RIG put from the current $1.85/share price down to, say, $1.60, then bailed out in a few weeks. Importantly, that's a whole different ball game than when an investor buys RIG as a 1 to 3 year turn-around play on the boom-bust cycles that oil exploration typically experiences.
Secondly, "traders" aren't going to be able to "time" anything with much accuracy over a short duration of time. Despite all the hype you read, nobody "times" the market with much accuracy with short duration trades. Even my own Transocean Tranche purchases this spring ranged all the way from $.90 per share up to as much as $1.50. I was doing the best I could to get it as cheaply as I could... mostly in the $1.20 to $1.30 range... but I didn't know any more than anybody else what it would do week-to-week. Heck, it even surged above $4.00 briefly before falling back down amidst a raft of "I told you so's" amidst the lemming herd over at Motley Fool.
Finally, I'd add that for an "investor" (eg: not "trader"), a surge in outstanding puts or shorts is a bullish sign, and more accurate than not as a entry-point signal. I think most folks on this forum know why... because future short covering is an exercise in buying a stock, which helps it rise, so an abundance of outstanding short/put positions is essentially pent-up, future buying demand.
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RIG
Jul 3, 2020 20:09:23 GMT -5
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Post by Blitz on Jul 3, 2020 20:09:23 GMT -5
I was guessing the $1.3M bet was a hedge.
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Post by Deleted on Jul 10, 2020 10:58:43 GMT -5
Transocean settles ENI dispute gets $185M 7/2/2020
Morgan Stanley drops Rig from overweight to equalweight 7/8/2020
Rig cuts 110 jobs at Drillship 7/10/2020
There are no links
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Post by bjspokanimal on Jul 13, 2020 18:25:55 GMT -5
@ taxx;
The ENI dispute involved ENI signing a 5 year contract for the deepwater pathfinder in 2008, right before the market crash. ENI drilled with pathfinder for 3 years, then terminated the contract. The $185 million settlement is a good example of how Transocean utilizes early- termination clauses in it's contracts in ways that smaller drillers can't match. Pathfinder is over 20 years old and not an "ultra" deepwater rig (eg: 4th generation drillship) and was scrapped as part of Transocean's reorganization and streamlining operations a couple of years ago.
ENI tried to claim that Transocean wasn't properly maintaining the rig, but the judge(s) wouldn't have any of it... considering how thoroughly Transocean has been maintaining it's rigs since the deepwater horizon incident. The courts were about to award Transocean ~$185 million anyway... Transocean agreed to pay it's own attorney's fees in the settlement in order to settle with ENI under terms that would ensure that ENI would still view Transocean as a preferred provider for drilling services.
Regarding the layoffs, Transocean was very assertive in it's Q1 earnings conference call that it would quickly warm and cold-stack currently active rigs that couldn't secure new contracts. In better times for the industry, they would retain such crews longer while marketing idle rigs but expense control needs to be much more proactive this year... especially as they complete the construction of their 2, new, 8th generation ships, which are unrivaled in terms of capability for newly discovered, multi-billion barrel fields in 10,000 to 12,000 foot water depths.
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RIG
Jul 14, 2020 8:01:58 GMT -5
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Post by Deleted on Jul 14, 2020 8:01:58 GMT -5
Thank you Spok,, for the clarification, I just saw the headline(s) and didn't get a chance to look into what it was about
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RIG
Jul 14, 2020 11:26:29 GMT -5
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Post by Deleted on Jul 14, 2020 11:26:29 GMT -5
OPEC sees record rise in global oil demand in 2021 : 7/14/2020 : Lili Reinhart, Tia Mowry, Ne-Yo and More Stars Pay Tribute to Naya Rivera www.msn.com/en-us/money/markets/opec-sees-record-rise-in-global-oil-demand-in-2021/ar-BB16IsQ6?li=BBnb7KzReuters OPEC sees record rise in global oil demand in 2021 LONDON (Reuters) - Global oil demand will soar by a record 7 million barrels per day in 2021 as the global economy recovers from the coronavirus pandemic but will remain below 2019 levels, OPEC said in its monthly report. a close up of a sign: A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture© Reuters/DADO RUVIC A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture It was the first report in which OPEC assessed oil markets next year. It said the forecast assumed no further downside risks materialised in 2021 such as U.S.-China trade tensions, high debt levels or a second wave of coronavirus infections. "This assumes that COVID-19 is contained, especially in major economies, allowing for recovery in private household consumption and investment, supported by the massive stimulus measures undertaken to combat the pandemic," OPEC said. (Reporting by Dmitry Zhdannikov; editing by Jason Neely)
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RIG
Jul 15, 2020 13:29:59 GMT -5
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Post by bjspokanimal on Jul 15, 2020 13:29:59 GMT -5
Today's report from the EIA was more consequential than usual. www.eia.gov/petroleum/weekly/index.phpThe sizable drops in crude and gasoline inventories were expected, after yesterday's API report provided a preview of them. What was most interesting, was the analysis of capital spending on the "analysis" page at the link above. Capital spending for this year is WAY down... very little drilling or development going on. That's interesting, because when you click on the "gasoline" tab and scroll to the bottom, it's noteworthy that U.S. gasoline consumption is within a million barrels a day of normal now. At the depths of the covid-19 shutdown this spring, consumption was running more than 4 million barrels a day below normal. Diesel has been slower to pick up, demand-wise, which is why it's inventory graphic shows near record levels of diesel in storage. I see the disparity of gasoline vs diesel (distillate) as being a faster pickup in discretionary driving vs a slower pickup of commercial hauling. This is a perfect example of the economic "inelasticity" of oil, which is most pronounced in gasoline and heating oil and less so in diesel, which is more closely tied to the economy. Overall, the rapid rise in gasoline consumption should be considered relative to both the dearth of new drilling AND the OPEC+ cutbacks and lower non-OPEC production, which is a more price-incentive thing. The longer that prices remain relatively low while consumption picks up, the more intense the next up-cycle in oil "should" be... but... I say that a bit tongue-in- cheek, considering how elongated the down-cycle that began 5 years ago has been. One difference between now and the eventual price recovery from 5 years ago, however, is that oil company balance sheets are in much worse shape now than then. That means that even when oil hits $60 to $70 a barrel again... hopefully early in 2021... it's still going to take time for capital spending budgets to recover enough for drilling to really take off. That "lag" is not so good for drillers, initially, but to the extent that it further exacerbates "depletion", it will likely make the next oil up-cycle even more acute by 2022. A caveat to the last paragraph; Deep water drilling is much more dependent on oil majors, whose balance sheets WILL be in better shape once prices rise above $60 again. It's more the little companies, mostly on-shore or offshore in shallow water, that will need extra time to shore up their finances and get back in the good graces of their lenders.
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RIG
Jul 16, 2020 18:53:22 GMT -5
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Post by Deleted on Jul 16, 2020 18:53:22 GMT -5
Transocean Ltd. Provides Quarterly Fleet Status Report : STEINHAUSEN, Switzerland—July 15, 2020— Transocean Ltd. (NYSE: RIG) today issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs. Transocean posts lower linked quarterly backlogAs of July 15, the company’s total backlog is approximately $8.9 billion. This quarter’s report includes the following updates: Paul B. Loyd Jr. – Customer terminated its current drilling contract in the U.K.
Transocean stated it was compensated for the termination and is picking up a new client (Chrysaor) in OctoberThe report can be accessed on the company’s website: www.deepwater.com. Full Report with numerous information at the below link: www.deepwater.com/Documents/FSR-July%202020.pdf
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RIG
Jul 17, 2020 17:59:02 GMT -5
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Post by bjspokanimal on Jul 17, 2020 17:59:02 GMT -5
The July 15th backlog of $8.9 billion is down from the $9.6 billion backlog on March 31st. The backlog was reduced (eg: monetized) in part by the early termination fee paid by the termination of the Paul B. Loyd drillship.
I would suspect that RIG's backlog will hit $8 billion by new years but lower if there are more compensated early terminations. Even if crude were to approach $60 by Christmas, E&P budget constraints shouldn't allow the company to grow it's backlog in 2020.
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RIG
Jul 20, 2020 6:45:04 GMT -5
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Post by CardsFan on Jul 20, 2020 6:45:04 GMT -5
Need to correct myself, it’s noble energy, not noble corporation that Chevron is buying so the deal makes sense. The former has acreage with good economics, the latter is the offshore driller. Disregard previous post
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RIG
Jul 29, 2020 17:21:29 GMT -5
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Post by bjspokanimal on Jul 29, 2020 17:21:29 GMT -5
Good earnings report today. I'm really glad they reorganized management <5 years ago to the team they have now... much better run company than previously.
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RIG
Jul 31, 2020 12:46:32 GMT -5
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Post by bjspokanimal on Jul 31, 2020 12:46:32 GMT -5
Another "sell Transocean" article from a Motley fool. Ever since they started spewing these articles out a few months ago, Transocean has bottomed out and started up from it's sub- $1.00 low. It never fails, Motley Fool is the perfect, negatively correlated stock indicator! www.fool.com/investing/2020/07/31/3-stocks-id-avoid-right-now.aspxWhen I read this article, it's like I'm a podiatrist M.D. listening to some housewife selling snake oil for people's feet. It's absolutely NAUSEATING how little these M.F. people know about how this industry, and oil cycles, work. Even with asset-intensive companies like Transocean, they still stay riveted on "earnings" and rarely mention EBITDA or cash flow that's such an essential discussion to have when you're talking about an asset-intensive company surviving to be "the last man standing" when the next oil up-cycle begins. This guy also liked to dwell on the cost of drilling deep-water oil wells when U.S. shale wells can be drilled so cheaply. I'd like to ask this guy how many shale wells he'd have to drill in order to produce as much oil as one, deepwater, pre-salt structured well offshore Brazil would produce. Do you think he'd be able to answer that? In fact, the last question in the company's Q2 conference call focused entirely on that "last company standing" concept. Q2 results for RIG also did a good job of illustrating that the company is "surviving" better than anybody thought the Q2 results would indicate.
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Post by CardsFan on Aug 2, 2020 2:18:05 GMT -5
I didn't listen to RIG's call but I did listen to Nabors. Did RIG mention Saudi orders, the ones they were going to get from the Nabors/Aramco JV? Nabors announced that none of the newer build, Transocean sourced rigs would come online until 2022 at the soonest. While Rig counts are way down, one of the best parts of the BK's and consolidation, is Nabors highlighted how it has a much larger share of the survivors like Chevron. Something else that was huge, was the adoption of its rig software platform. It used to be they'd sell one piece of drilling management software. Now they are selling 3 or more, which is buffering the loss of rigs.
I agree with BjSpoke's last man standing analogy. The only concern I have is what Biden will do if elected. I haven't sold any energy shares yet but I certainly haven't been buying any. I don't see any of the major oil firms doing that well right now except maybe Valero. Interestingly enough, the latter talked about how even if Biden won, their ability to expand renewable fuel production would benefit, especially on the renewable diesel side.
In other news, Noble just declared BK today.
PS... my best friend is a higher up at Chevron (used to work at Exxon). When we spoke last week, the one thing he kept harping on is these companies have cut back so much, they no longer have enough 'developmental' prospects. I found that interesting given Chevron has about the only clean balance sheet out of the majors.
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