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RIG
Aug 2, 2020 6:02:09 GMT -5
Post by Blitz on Aug 2, 2020 6:02:09 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. So, CVX is buying Nobel for $13B and losing $8B per quarter and paying $1.29 dividend... I would guess somethings got to give? ///////////////////////// Chevron shares fall after oil giant reports an $8.3 billion loss for second quarter PUBLISHED FRI, JUL 31 2020 - Pippa Stevens www.cnbc.com/2020/07/31/chevron-cvx-earnings-q2-2020.htmlChevron reported an $8.3 billion loss in the second quarter as the coronavirus pandemic “significantly reduced demand.” The oil giant lost $1.59 per share on an adjusted basis, while revenue came in at $13.49 billion. Analysts expected the company to post a loss of 92 cents per share, on $22.097 billion in revenue, according to estimates from Refinitiv. “The past few months have presented unique challenges,” CEO Michael Wirth said. Chevron on Friday reported an $8.3 billion loss in the second quarter as the coronavirus “significantly reduced demand.” Amid a historic drop in oil prices, the company’s average price per barrel of oil and natural gas liquids fell more than 60% year over year. The oil giant lost $1.59 per share on an adjusted basis, while revenue came in at $13.49 billion. In the same quarter a year ago the company earned $2.27 per share on $36.32 billion in revenue. Analysts expected the company to post a loss of 92 cents per share, on $22.097 billion in revenue, according to estimates from Refinitiv. Part of the company’s loss came from noncash net charges of $5.2 billion, including a $1.8 billion write-down primarily associated with a downward revision in commodity price outlook, as well as a $2.6 billion impairment change related to Chevron’s Venezuela investment. The company also reported $780 million in expenses related to job cuts. Shares of Chevron finished the day 2.7% lower, after earlier declining by more than 5%. “The past few months have presented unique challenges,” CEO Michael Wirth said in a statement. “The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices. Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook.” The company said that while demand and prices have started to show signs of recovery, they’re not back to pre-pandemic levels. Given the uncertain outlook, Chevon said results could be depressed next quarter, too. During the second quarter, the company’s average sales price per barrel of oil and natural gas liquids in the U.S. was $19, down from $52 a year earlier. Natural gas prices rose to 81 cents per thousand cubic feet, up from 68 cents a year earlier. “We’re focused on what we can control. Our actions are guided by our values and our long-standing financial priorities: to protect the dividend, invest for long term value and maintain a strong balance sheet,” Wirth said. Earlier in July, Chevron announced plans to buy independent oil and gas producer Noble Energy, in a move that Wirth said would be a “good deal” for shareholders in both companies. Including debt, the total value of the deal was $13 billion.The acquisition would enhance Chevron’s portfolio in the oil-rich Permian Basin, as well as in Colorado’s DJ Basin. Noble Energy also has assets in Israel and West Africa, which will further enhance Chevron’s international footprint. It will also lead to around $300 million in annual cost savings, Chevron said. The deal was the industry’s largest since oil prices plummeted in March and April, hit by a price war between Saudi Arabia and Russia, as well as an unprecedented plunge in demand due to the pandemic For the first quarter, Chevron reported earnings per share of $1.93, which included $680 million in one-time favorable items, and $31.5 billion in revenue, helped by downstream margins and increased production in the Permian Basin. Shares of Chevron are down 28% this year. ///////////////////////////// Chevron deal ends Israel’s energy isolation Entrance of a US oil giant with deep Saudi ties signals end to Arab boycott of Israel By SHAIEL BEN-EPHRAIM - JULY 24, 2020 asiatimes.com/2020/07/chevron-deal-ends-israels-energy-isolation/Chevron this week became the first major energy company to enter the Israeli market, a watershed moment for a country long kept at bay by corporations fearful of losing business in the Gulf Arab states. The US multinational on Monday announced it had bought out Texas-based Noble Energy in a US$5 billion deal with an overall value of $13 billion, including debt. Noble discovered all of Israel’s major gas holdings in the last 20 years, most notably the Tamar and Leviathan fields in the eastern Mediterranean. Israeli companies own 60% of the Leviathan field and 75% of the Tamar field, while Chevron will now own the remainder. Noble is also selling its assets in Africa and the United States, but the Israeli fields are the centerpiece of its portfolio.
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RIG
Aug 2, 2020 6:17:31 GMT -5
Post by Blitz on Aug 2, 2020 6:17:31 GMT -5
Transocean Ltd. Reports Second Quarter 2020 Results investor.deepwater.com/news-releases/news-release-details/transocean-ltd-reports-second-quarter-2020-results#Total contract drilling revenues were $930 million (total adjusted contract drilling revenues of $983 million), compared with $759 million in the first quarter of 2020 (total adjusted contract drilling revenues of $807 million); Revenue efficiency(1) was 97.2%, compared with 94.4% in the prior quarter; Operating and maintenance expense was $525 million, compared with $540 million in the prior period; Net loss attributable to controlling interest was $497 million, $0.81 per diluted share, compared with net loss attributable to controlling interest of $392 million, $0.64 per diluted share, in the first quarter of 2020; Adjusted net loss was $1 million, excluding $496 million of net unfavorable items. This compares with adjusted net loss of $187 million, $0.30 per diluted share, in the previous quarter; Adjusted EBITDA was $418 million, compared with adjusted EBITDA of $235 million in the prior quarter; and Contract backlog was $8.9 billion as of the July 2020 Fleet Status Report. STEINHAUSEN, Switzerland, July 29, 2020 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $497 million, $0.81 per diluted share, for the three months ended June 30, 2020. Second quarter 2020 results included net unfavorable items of $496 million, or $0.81 per diluted share, as follows: $430 million, $0.70 per diluted share, loss on impairment of assets $59 million, $0.10 per diluted share, loss on impairment of an investment in an unconsolidated affiliate $10 million, $0.02 per diluted share, related to discrete tax items; and $1 million in restructuring costs. These unfavorable items were partially offset by: $4 million, $0.01 per diluted share, gain on retirement of debt. After consideration of these net unfavorable items, second quarter 2020 adjusted net loss was $1 million. Contract drilling revenues for the three months ended June 30, 2020, increased sequentially by $171 million, primarily due to $177 million of revenues recognized in second quarter 2020, resulting from a settlement agreement with a customer for performance disputes. Additionally, the second quarter was favorably impacted by higher revenue efficiency, and an early termination fee of $21 million for Paul B. Loyd Jr., offset by lower revenues due to reductions in dayrates and a non-cash revenue reduction of $53 million, compared to $48 million in the prior quarter, from contract intangible amortization associated with the Songa and Ocean Rig acquisitions. Operating and maintenance expense was $525 million, compared with $540 million in the prior quarter. The sequential decrease was the result of lower in-service maintenance cost across our fleet, partially offset by $30 million of higher costs related to the COVID-19 pandemic. General and administrative expense was $45 million, as compared to $43 million in the first quarter of 2020. Interest expense, net of amounts capitalized, was $153 million, compared with $160 million, in the prior quarter. Interest income was $4 million, compared with $9 million in the previous quarter. The Effective Tax Rate(2) was (6.8)%, down from 1.1% in the prior quarter. The decrease was primarily due to various discrete period tax items, including revenues recognized for settlement of disputes. The Effective Tax Rate excluding discrete items was (15.0)% compared to (9.5)% in previous quarter. Net cash provided by (used in) operating activities were $87 million, compared to $(48) million in the prior quarter. The second quarter cash provided by operating activities increased primarily due to collections of certain receivables and decreased income tax payments. Second quarter 2020 capital expenditures of $46 million decreased primarily due to reduced expenditures for our newbuild rigs under construction. This compares with $107 million in the previous quarter. "I recognize and thank the entire Transocean team for producing strong second quarter operating and financial results during these unprecedented times," said Jeremy Thigpen, President and Chief Executive Officer. "Our revenue efficiency of 97% demonstrates our unwavering commitment to delivering reliable and efficient operations for our customers, while keeping personnel on our rigs safe and healthy.” Thigpen added, “Furthermore, we are excited to have secured a contract, subject to a final investment decision by our customers, that will result in upgrading Deepwater Atlas into the industry’s second 20,000 PSI ultra-deepwater drillship. This contract is meaningful as it moves us closer towards securing backlog for our remaining newbuild drillship, and clearly demonstrates our customer’s confidence in Transocean as the undisputed leader in ultra-deepwater drilling.”
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RIG
Aug 2, 2020 20:59:04 GMT -5
Post by CardsFan on Aug 2, 2020 20:59:04 GMT -5
So, CVX is buying Nobel for $13B and losing $8B per quarter and paying $1.29 dividend... I would guess somethings got to give? ///////////////////////// According to my friend, they felt 'forced' to buy Noble after missing out on Occidental. CVX's dividend will be fine. At least near term. Buddy is trying to decide if he's going to take a buyout at the moment. CVX will be cutting quite a few jobs. Exxon is the one that really needs to cut its divvy. Last week, they said they wouldn't, but I believe if anyone cuts, theirs will be next domino to fall.
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RIG
Aug 5, 2020 18:52:46 GMT -5
Post by redbullnvodka on Aug 5, 2020 18:52:46 GMT -5
Any comments on the after hours move as it relates to the debt restructuring?
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Post by Deleted on Aug 5, 2020 21:21:09 GMT -5
Transocean Ltd. Announces Private Exchange Agreement Relating to Existing Exchangeable Bonds, Certain Internal Reorganization Transactions, and Evaluation of Potential Liability Management Transactions PUBLISHED AUG 5, 2020 4:31PM EDT www.nasdaq.com/press-release/transocean-ltd.-announces-private-exchange-agreement-relating-to-existingSTEINHAUSEN, Switzerland, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) (“Transocean”) announced today that it has executed a private exchange agreement relating to the 0.5% Exchangeable Bonds due 2023 (the “Existing Exchangeable Bonds”) issued by Transocean Inc., Transocean’s wholly-owned subsidiary, that it has commenced certain internal reorganization transactions, and that it is evaluating certain potential liability management transactions. Pursuant to the private exchange agreement, Transocean Inc. agreed to exchange approximately $356 million aggregate principal amount of its Existing Exchangeable Bonds for approximately $213 million aggregate principal amount of new 2.5% Senior Guaranteed Exchangeable Bonds due 2027 (the “Senior Guaranteed Exchangeable Bonds”) to be issued by Transocean Inc. The Senior Guaranteed Exchangeable Bonds will be guaranteed by Transocean and three indirect holding company subsidiaries of Transocean Inc.: Transocean Mid Holdings 1 Limited (“Mid Holdings 1”), Transocean Mid Holdings 2 Limited (“Mid Holdings 2”) and Transocean Mid Holdings 3 Limited (“Mid Holdings 3”, collectively with Mid Holdings 1 and Mid Holdings 2, the “Structurally Senior Guarantors”). The Structurally Senior Guarantors are owned by Transocean Holdings 1 Limited, Transocean Holdings 2 Limited and Transocean Holdings 3 Limited, which, following the internal reorganization transactions, will continue to own, directly or indirectly, all of the outstanding equity interests of the other subsidiaries of Transocean Inc., including Transocean Asset Holdings 1 Limited, Transocean Asset Holdings 2 Limited and Transocean Asset Holdings 3 Limited. The exchange is subject to customary closing conditions. The Senior Guaranteed Exchangeable Bonds will have an initial exchange rate of 162.1626 Transocean common shares, par value $0.10 Swiss francs per share (“Common Shares”), per $1,000 original principal amount, subject to adjustment, and will be convertible into Common Shares, implying an initial exchange price of approximately $6.17 per share. Transocean has also commenced a series of internal reorganization transactions involving the transfer of certain assets and liabilities of certain indirect, wholly-owned subsidiaries of Transocean Inc., including the transfer of the harsh environment floaters Transocean Endurance and Transocean Equinox and the indebtedness secured thereby to a newly created indirect subsidiary of Transocean. Transocean is evaluating additional potential liability management transactions in connection with its efforts to prudently manage its liquidity and debt maturities. In connection therewith and in order to proactively evaluate strategic alternatives to manage its capital structure, Transocean has retained Lazard Frères & Co. LLC, as financial advisor. At this time, no decisions have been made by Transocean with respect to additional future liability management transactions. There can be no assurance that any such transactions will be offered or consummated by Transocean or Transocean Inc. Transocean does not undertake any obligation to provide any updates with respect to any such liability management transactions, except as required under applicable law. The Senior Guaranteed Exchangeable Bonds and Transocean’s Common Shares issuable upon exchange of the Senior Guaranteed Exchangeable Bonds have not been registered under the Securities Act of 1933, as amended, or under any state securities laws and may not be offered or sold without registration under, or an applicable exemption from, the registration requirements. This press release does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About Transocean Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world. Transocean owns or has partial ownership interests in, and operates a fleet of 39 mobile offshore drilling units consisting of 27 ultra-deepwater floaters and 12 harsh environment floaters. In addition, Transocean is constructing two ultra-deepwater drillships. Forward-Looking Statements This press release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as “forward-looking statements”). Forward-looking statements include statements regarding the Transocean’s plans to exchange the Existing Exchangeable Bonds for Senior Guaranteed Exchangeable Bonds, evaluate strategic alternatives to manage its capital structure and transfer certain assets and liabilities of certain of its subsidiaries. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Transocean to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause actual results to vary include, but are not limited to, risks relating to the closing of the private exchange agreement, conditions in financial markets, investor response to the private exchange agreement, and other risk factors as detailed from time to time in Transocean’s reports filed with the U.S. Securities and Exchange Commission. Readers are cautioned against unduly relying on forward-looking statements. Forward-looking statements speak only as of the date hereof, and, except as required by law, Transocean undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information or future events or otherwise. Analyst Contacts:Bradley Alexander+1 713-232-7515 Lexington May+1 832-587-6515 Media Contact:Pam Easton+1 713-232-7647
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RIG
Aug 5, 2020 21:26:43 GMT -5
Blitz likes this
Post by Deleted on Aug 5, 2020 21:26:43 GMT -5
Can you believe this, days before the restructuring, hmmm someone knew something and acted on it before the restructuring transaction, Hello! SEC!
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Interesting RIG Put And Call Options For September 4th CONTRIBUTOR - BNK Invest - PUBLISHED - JUL 23, 2020 www.nasdaq.com/articles/interesting-rig-put-and-call-options-for-september-4th-2020-07-23Investors in Transocean Ltd (Symbol: RIG) saw new options begin trading today, for the September 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the RIG options chain for the new September 4th contracts and identified one put and one call contract of particular interest. The put contract at the $2.00 strike price has a current bid of 21 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $2.00, but will also collect the premium, putting the cost basis of the shares at $1.79 (before broker commissions). To an investor already interested in purchasing shares of RIG, that could represent an attractive alternative to paying $2.02/share today. Because the $2.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 10.50% return on the cash commitment, or 89.13% annualized — at Stock Options Channel we call this the YieldBoost. Below is a chart showing the trailing twelve month trading history for Transocean Ltd, and highlighting in green where the $2.00 strike is located relative to that history: Turning to the calls side of the option chain, the call contract at the $2.50 strike price has a current bid of 3 cents. If an investor was to purchase shares of RIG stock at the current price level of $2.02/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $2.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 25.25% if the stock gets called away at the September 4th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if RIG shares really soar, which is why looking at the trailing twelve month trading history for Transocean Ltd, as well as studying the business fundamentals becomes important. Below is a chart showing RIG's trailing twelve month trading history, with the $2.50 strike highlighted in red: Considering the fact that the $2.50 strike represents an approximate 24% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.49% boost of extra return to the investor, or 12.61% annualized, which we refer to as the YieldBoost. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $2.02) to be 132%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com. Top YieldBoost Calls of the S&P 500 » The views and opinions expressed herein
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RIG
Aug 6, 2020 7:26:10 GMT -5
Post by Blitz on Aug 6, 2020 7:26:10 GMT -5
Looks like a very good play to make 20% in a short period of time.
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RIG
Aug 6, 2020 7:32:16 GMT -5
Post by Blitz on Aug 6, 2020 7:32:16 GMT -5
Transocean Ltd. Announces Private Exchange Agreement Relating to Existing Exchangeable Bonds, Certain Internal Reorganization Transactions, and Evaluation of Potential Liability Management Transactions PUBLISHED AUG 5, 2020 4:31PM EDT The Senior Guaranteed Exchangeable Bonds will have an initial exchange rate of 162.1626 Transocean common shares, par value $0.10 Swiss francs per share (“Common Shares”), per $1,000 original principal amount, subject to adjustment, and will be convertible into Common Shares, implying an initial exchange price of approximately $6.17 per share. I would have to say this is good based on the share price being achieved over this short period of time. It says to me the people loaning the money think the share price will be at $6.17 level. This seems too easy to figure out so I must have missed something as things are rarely that easy when it comes to finance...
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RIG
Aug 6, 2020 15:03:13 GMT -5
Blitz likes this
Post by bjspokanimal on Aug 6, 2020 15:03:13 GMT -5
Transocean Ltd. Announces Private Exchange Agreement Relating to Existing Exchangeable Bonds, Certain Internal Reorganization Transactions, and Evaluation of Potential Liability Management Transactions PUBLISHED AUG 5, 2020 4:31PM EDT The Senior Guaranteed Exchangeable Bonds will have an initial exchange rate of 162.1626 Transocean common shares, par value $0.10 Swiss francs per share (“Common Shares”), per $1,000 original principal amount, subject to adjustment, and will be convertible into Common Shares, implying an initial exchange price of approximately $6.17 per share. I would have to say this is good based on the share price being achieved over this short period of time. It says to me the people loaning the money think the share price will be at $6.17 level. This seems too easy to figure out so I must have missed something as things are rarely that easy when it comes to finance... Basically paid it down and stretched it out. They get a good rate on a convertible, given that their regular bonds are paying very high yields right now. Convertibles are also looking good to investors who are tracking the trajectory of Transocean's stock price, oil prices, and oil consumption and storage trends. I'm not sure what the deal is with the Equinox and the Endurance, and the debt that is secured by those ships, into a newly created, indirect subsidiary. My guess is that if one of the 2 ships fails to secure a contract, but the revenue from the other is sufficient to make debt payments but NOT be accretive to EPS, it would help RIG's overall income statement and perhaps keep EBITDA-related debt covenants more manageable. Again, just a guess.
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Deleted
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RIG
Aug 6, 2020 15:09:48 GMT -5
Blitz likes this
Post by Deleted on Aug 6, 2020 15:09:48 GMT -5
2 news reports today: No link available
Evercore ISI reinstated its $4 PT on RIG.
RIG retains Lazard for advice on stratigic alternatives.
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RIG
Aug 10, 2020 6:50:34 GMT -5
Post by Blitz on Aug 10, 2020 6:50:34 GMT -5
Even if this doesn't change the actual supply of oil worldwide, the optics could cause the price to go up and that could create a psychological reason for RIG to go up short term... ///////////////////////////// Saudi Arabia Turns Off America’s Oil Taps Again Julian Lee - 8/9/2020 www.msn.com/en-us/money/markets/saudi-arabia-turns-off-america-s-oil-taps-again/ar-BB17KnvY(Bloomberg Opinion) -- For the second time in three years, Saudi Arabia is slashing the volume of crude it’s sending to America in an attempt to force down stockpiles in the world’s most visible oil market and thereby hasten the rebalancing of supply and demand. Weekly U.S. oil inventory data — usually published on a Wednesday and covering the period up to the previous Friday — is routinely pored over by oil analysts and traders alike. Despite their shortcomings, the figures give the most up-to-date picture of changes in the oil balance and influence trading decisions and crude prices around the world. Shifts in the flow of crude into and out of American ports can have a big impact on the level of U.S. inventories. Riyadh has clearly decided it’s time to do its bit to bring them down from heights reached in May and June, when the coronavirus pandemic and the kingdom’s own output hike combined to drive the fastest ever surge in U.S. commercial crude stockpiles. In the five weeks between March 20 and April 24, the inventories increased at a rate of 2.1 million barrels a day and by the first week of June it was hitting new highs. a screenshot of a cell phone: Down the Other Side© Bloomberg Down the Other Side Excess stockpiles act as a drag on oil prices and the most visible stockpiles are in the U.S. because the Department of Energy’s Energy Information Administration reports levels weekly. That’s in stark contrast to other places around the world where the data are much less timely, if they are published at all. China, for example, stopped divulging official data on inventory levels in 2017. It’s no wonder then that Saudi Arabia should focus on the U.S. This is precisely the same policy that it adopted three years ago, shortly after the wider OPEC+ alliance was formed and its first output deal was running into trouble. At the time, members of the Organization of Petroleum Exporting Countries and 10 non-OPEC allies, including Russia and Mexico, agreed to cut their production by 1.66 million barrels a day from the start of 2017 to bring down swollen global oil inventories built up as a result of the first U.S. shale boom. Poor implementation of the cuts and rising U.S. oil production meant inventories kept on growing, despite OPEC making its first output reduction in eight years. Fast forward to today and the reduction in the flow of Saudi oil to the U.S. is dramatic. In May and June tankers full of Saudi crude were arriving off the Gulf and West coasts of the U.S. almost daily, sometimes more than one a day. But in July and August that has dwindled to little more than one a week, as the chart below shows. Dwindling Flow© Bloomberg Dwindling Flow That surge in ships, which I wrote about here, briefly drove U.S. imports of Saudi crude close to a six-year high, adding to the upward push on stockpiles. But it was short-lived and imports in the last week of July were just 190,000 barrels a day, their second-lowest level in weekly data that extends back a decade. After the Surge© Bloomberg After the Surge The figure could fall even further in the coming weeks. There are only 6 tankers carrying 9 million barrels of Saudi crude currently showing a U.S. port as their destination, according to tanker-tracking data monitored by Bloomberg. With a journey time of about six weeks from the Persian Gulf to any of the major U.S. oil ports, that’s all the Saudi crude that’s likely to arrive by mid-September. And things aren’t likely to improve much after that. In setting its official crude prices for September, Saudi Arabia has made significant cuts to prices for European customers, where it’s competing with Russia, and smaller ones for buyers in Asia. But the kingdom has kept prices for the U.S. unchanged from last month. a screenshot of a cell phone: Cut-Price Crude© Bloomberg Cut-Price Crude By doing so, Saudi Arabia is ensuring that its crude remains uncompetitive against domestic heavy sour grades from the Gulf of Mexico, or imports from Canada, in a market where the hoped-for recovery in demand has stalled. The leaders of Saudi Arabia and the U.S. both want to see oil prices rising from current levels — the kingdom’s budget still depends on oil revenues and the U.S. shale industry desperately needs higher prices to recover. President Donald Trump might be quite happy to see crude imports from Saudi Arabia curtailed — after all, it would feed in nicely to his rhetoric on U.S. energy dominance. By once again focusing its output cuts on the U.S. market, Riyadh is hoping to repeat the success of the second half of 2017, when oil prices rose by 51% from a low of $44.82 in mid-June to $67.87 by the end of the year. Unless the Covid-19 pandemic eases its grip on oil demand, Saudi Arabia may find 2020 more of a challenge. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies. ©2020 Bloomberg L.P.
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RIG
Aug 10, 2020 16:27:32 GMT -5
Blitz likes this
Post by bjspokanimal on Aug 10, 2020 16:27:32 GMT -5
@ blitz; re: above graphics/info...
A lot of the Saudi's over-production early this year was aimed at hurting shale producers so a lot of it was aimed at the U.S.
As far as current discounts go, The U.S. has been the world's biggest oil producer since the shale boom got going. For countries dependent on imports, the Saudi's have to compete with other global oil producers so they'll discount sufficiently to protect their market share. In the U.S., pricing is more free-market driven by supply/demand within the U.S. so any discounts are going to be more conforming to that market, rather than contrived with a bend toward preserving market share.
Separately, the last couple of weeks of big draws in U.S. crude inventories has been quite a support for WTI prices, but I would caution that there is still quite a bit of "floating inventory" in tankers offshore that isn't counted in official U.S. crude inventories until it's tabulated as such, which is usually when it's offloaded.
I've noticed too that gasoline demand has leveled off over the past couple of weeks after having recovered about 76 to 77% of the drop in demand triggered by covid. This fall should be interesting.
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RIG
Aug 11, 2020 6:45:59 GMT -5
Post by Blitz on Aug 11, 2020 6:45:59 GMT -5
Thanks, Spok. "This Fall is going to be interesting" ... understatement of the year!
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RIG
Aug 11, 2020 16:20:34 GMT -5
Blitz likes this
Post by bjspokanimal on Aug 11, 2020 16:20:34 GMT -5
I say this fall will be interesting because gasoline demand will drop off due to the end of the vacation season (eg: summer driving season) after labor day.
The good news is that we're seeing inventory draws every week. This week (for the week ending last friday), API reported a crude draw of over 4 million barrels but unlike the last few weeks, we saw draws across the board, including gasoline and distillate inventories.
U.S. production is still off around 2.5 million barrels a day. In shale, even though there are more wells turned back on every week, they aren't enough to counter the rapid depletion that producing shale wells experience in general. Since there's hardly any drilling, there's very little new production to counter that rapid depletion.
Separately, I noticed that Transocean is doing more debt swaps to move maturities further into the future in order to guard against a longer than expected drilling slump.
I was asked yesterday why they're re-issuing less than they're redeeming and why they're ok with the higher interest rates. The answer to that, is that what they're redeeming is being shown as the "principle" amount, whereas those bonds are selling at a substantial discount and yielding much higher than their coupon. Thus, Transocean is tendering for the bonds down closer to market prices and re-issuing at par with the higher coupon. The higher cost of the new coupons is mostly made up for by the discount from par Transocean is buying the existing debt at... but not entirely, because there has to be a price to pay for extending the maturities, or else investors wouldn't bite on the tender.
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RIG
Aug 12, 2020 15:37:13 GMT -5
Post by redbullnvodka on Aug 12, 2020 15:37:13 GMT -5
I was asked yesterday why they're re-issuing less than they're redeeming and why they're ok with the higher interest rates. The answer to that, is that what they're redeeming is being shown as the "principle" amount, whereas those bonds are selling at a substantial discount and yielding much higher than their coupon. Thus, Transocean is tendering for the bonds down closer to market prices and re-issuing at par with the higher coupon. The higher cost of the new coupons is mostly made up for by the discount from par Transocean is buying the existing debt at... but not entirely, because there has to be a price to pay for extending the maturities, or else investors wouldn't bite on the tender. Care to provide a "for dummies" version of this?
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RIG
Aug 12, 2020 21:22:22 GMT -5
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Post by Blitz on Aug 12, 2020 21:22:22 GMT -5
Being a dummy myself... it’s go bk or do debt swaps so you don’t have to issue more shares of common stock thereby diluting all shareholders and regretting it when economies turn around. And with never before seen low rates, doing short term debt swaps is better than issuing more shares ... knowing that when oil markets return to normal... you’re one of a few survivors with the tools needed to drill deep in the oceans and as such you can charge premium prices because the competition is dead and buried!
Not sure I’m correct but it’s my stab at it...
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RIG
Aug 14, 2020 13:24:32 GMT -5
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Post by bjspokanimal on Aug 14, 2020 13:24:32 GMT -5
@ blitz; Well, issuing common stock shares was never part of the discussion because it would never be considered with the stock at $2.25 and the net, asset value of the company close to $19.00 per share. Even back when LVS issued stock in November of 2008 for $5.00 a share, CEO Weidner lost his job over it due to the dilution and Adelson's ire over it.
Basically, I wrote the above because it isn't clear to people that it's feasible to pay a much higher coupon for just a couple years of maturity extension if you're able to pay much less than par for the existing debt. Because the offshore drilling industry is so frightening to a lot of folks these days, Transocean's existing bonds are trading well below par and, thus, yielding far higher than the coupon interest rate(s). So, if they tender for the existing bonds at prices closer to what they're trading at, they're buying them back for much less than they originally issued them for. But, since current market interest rates are much higher, they have to offer rates closer to market rates with the new debt they're selling with the swap.
It's confusing to people because the coupons on the new debt is so much higher than what they're swapping out of. One would ask... "why pay so much more interest for just a couple years of maturity extension... why not just tough it out by cutting costs and using the revolver for what you need?"
But the difference in coupon interest is made up for (mostly) by the discount they're tendering for the existing debt. I say "mostly", because there still has to be a price to pay for asking debt holders to extend the maturities, or they wouldn't bite on the tender.
Hope that helps.
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RIG
Aug 14, 2020 14:45:27 GMT -5
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Post by bjspokanimal on Aug 14, 2020 14:45:27 GMT -5
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RIG
Aug 20, 2020 13:24:36 GMT -5
Post by Blitz on Aug 20, 2020 13:24:36 GMT -5
Transocean has gotten crushed over the last several trading days. It hit $2.61 interday recently... so basically down $1.00. I have not been able to find any big news to suck that much value of the stock except for Congress not getting the skinny deal done to continue paying people and companies hurt by the virus. Other news like airlines cutting back their schedules and Summer driving season ending, which I would have guessed was baked in?
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RIG
Aug 21, 2020 7:12:11 GMT -5
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Post by pyromancer157 on Aug 21, 2020 7:12:11 GMT -5
Transocean has gotten crushed over the last several trading days. It hit $2.61 interday recently... so basically down $1.00. I have not been able to find any big news to suck that much value of the stock except for Congress not getting the skinny deal done to continue paying people and companies hurt by the virus. Other news like airlines cutting back their schedules and Summer driving season ending, which I would have guessed was baked in? www.google.com/amp/s/seekingalpha.com/amp/news/3607633-transocean-tumbles-offshore-drilling-bankruptcies-mountTransocean tumbles as offshore drilling bankruptcies mount Aug. 20, 2020 3:59 PM ET|About: Transocean Ltd. (RIG)|By: Carl Surran, SA News Editor Transocean (RIG -16.9%) shares sink as much as 24% intraday, as the offshore drilling group continues to face severe headwinds in an environment of weak oil prices. Valaris, the world's largest offshore rig owner by fleet size, filed for Chapter 11 bankruptcy yesterday, joining rivals Noble Corp. and Diamond Offshore Drilling. Transocean recently said it is exploring strategic alternatives, and Pacific Drilling (PACD -11.6%) warned it may return to bankruptcy court for the second time in less than three years. "Offshore drilling is structurally damaged, and recovery is not imminent," Bernstein analyst Nicholas Green writes, adding the sub-sector is "moving into game theory," given the many bankruptcies underway or impending. Green believes Transocean should restructure to protect its long-term market share, although he says the impact on shareholders from such a move is unclear.
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RIG
Aug 21, 2020 7:41:02 GMT -5
Post by Blitz on Aug 21, 2020 7:41:02 GMT -5
Transocean debt plunges as company seeks strategic options Aug. 6, 2020 2:23 PM ET|About: Transocean Ltd. (RIG)|By: Carl Surran, SA News Editor seekingalpha.com/news/3602173-transocean-debt-plunges-company-seeks-strategic-optionsTransocean (RIG -7.5%) tumbles after the company said it had hired Lazard to help manage its capital structure; investors may be worried that the company is laying the groundwork for a restructuring. Transocean's bonds are falling sharply today, with its most actively traded debt, 7.5% senior unsecured note due 2031, down as much as $0.035 on the dollar to $0.26, while its 8% 2027 bonds sank $0.06 on the dollar to $0.435 this morning, leading declines in the U.S. high-yield market. Evercore ISI analyst James West says he is maintaining his In-Line rating on Transocean, saying that "after a conversation with management we understand the financial advisers were retained for liability management, not a corporate restructuring."Smaller rival Noble Corp. recently filed for bankruptcy, while Valaris has warned it may follow suit.
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RIG
Aug 21, 2020 13:56:19 GMT -5
Post by redbullnvodka on Aug 21, 2020 13:56:19 GMT -5
Ouch!!! This is getting worrisome.
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RIG
Aug 21, 2020 14:39:25 GMT -5
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Post by Blitz on Aug 21, 2020 14:39:25 GMT -5
This seems like an overreaction about a bk rumor...
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RIG
Aug 21, 2020 15:13:15 GMT -5
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Post by birdnest on Aug 21, 2020 15:13:15 GMT -5
I wish I didn’t buy more yesterday. Ouch!! My timing is horrible
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RIG
Aug 21, 2020 17:54:27 GMT -5
Post by redbullnvodka on Aug 21, 2020 17:54:27 GMT -5
I wish I didn’t buy more yesterday. Ouch!! My timing is horrible I bought more at at $2.40 just days ago....
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