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Post by bjspokanimal on Nov 9, 2020 17:46:46 GMT -5
I think the highlights of what got reported for Q3 are known here.
RIG lost an adjusted $69 million or 11 cents a share. EBITDA was plus $338 millionand revenue efficiency was 96%... amazing, given Covid interruptions and indicative of how quickly they resolve issues. Despite the industry bear market, this company is very well managed.
Operating cash flow was $81 million... down just a few million from Q2.
Of particular interest to me, was what they did with that cash flow, and I liked what I saw. About $37 million of it went toward their 2, newbuild drillships about $18 million went toward maintenance CAPEX, leaving around $26 million potentially as "free" cash flow.
So, they used that extra cash to augment their efforts to extend the maturities on their debt. Most of the debt extensions involve debt swaps but it was advantagious to purchase some of the nearer-dated debt for cash from some debt-holders most resistant to the swaps. In total, they spent about $49 million buying debt that was discounted enough to save $20 million against nearer-term par maturities
VIA the debt exchanges, they reduced their total debt by almost $1 billion without spending any cash to do it. Of course, the downside of swapping near-term discounted debt for new debt with maturities further out meant taking on higher interest debt servicing costs, but by using the $49 million cash to buy debt, they mitigated much of that increased servicing cost from the swaps.
With Q2 and Q3 being better than expected, RIG's liquidity stands at $2.9 billion ($1.6 billion cash and $1.3 billion un-drawn credit lines). The biggest concern for liquidity is the bigger cash expenditures on the newbuild drillships that are necessary in 2021 and 2022, which are projected to cut liquidity in half when conservatively estimating operating cash flow as they do.
Their backlog is $8.1 billion of work... easily by far the best backlog in the industry, but currently shrinking by around $600 million per quarter so bidding activity and potential new contracts takes on additional importance as the backlog is slowly monetized.
So... most interesting, is that bidding activity on new contracts rose substantially from Q2 to 18 total bidding participations during Q3, which was actually equal to bidding activity in Q4, 2019 before Covid arrived. Their interpretation of that is that they'll likey be contracting much more by late 2021, and that seemed to be the main driver behind the stock's surge from Q3 results/guidance.
Bottom line, the CEO stated 2, important things: 1) "Transocean is in a very different and advantageous position relative to our competitors as we are not currently facing a restructuring decision nor are we experiencing the difficult and demoralizing/crippling distractions associated with such a process"; 2) "(The) marketable supply of (industrywide) rigs is likely to fall at a pace that we expect will eventually meet with the contracted rig count, which we are already starting to see. Therefore, when oil prices stabilize at more favorable levels, an inflection in rig contracting should have an almost immediate and positive impact on dayrates, due to the shortage of marketable rigs and the significant expense associated with reactivating (cold) stacked rigs".
It's that second comment, about a supply/demand "inflection" point that is key to this company's upside. In oil production (like Exxon or Chevron), a bump in oil prices from $40 to $50 is likely met with increased OPEC production, limiting the revenues to just that price bump. But to the extent that such a bump increases rig demand to such an "inflection" point and available rigs become scarce, the "dayrate" on good rigs can double inside of a month's time, and accounts for the particularly boom/bust characteristics of a driller like RIG.
An important aspect to competing with restructured (eg: went through bankruptcy) competitors is that they often have less debt to service and will discount their rigs in the contract bidding process. Those competitors are more incentivized to get their rigs working at lower profit margins in order to get through the bear oil market without further bankruptcy problems. The upside, however, is that bankruptcy often forces scrapping or cold-stacking more rigs, so once they have their active rigs working, they're out of the market for further bidding since bankruptcy generally deplete's such companies cash so severely that they can't afford to activate cold-stacked rigs to meet further demand as readily as Transocean can opportunistically do with their liquidity. It can cost upwards of $15 to $40 million to activate a cold-stacked rig and a restructured company isn't going to be able to do that easily until oil prices recover substantially, leaving Transocean in the drivers seat for such reactivations when oil's between $45 and $55 a barrel... particularly since Transocean's highly- maintained and state of the art rigs can command higher dayrates to some extent due entirely to quality, trust and capability.
Finally, aside from the Q3 stuff, some important macro data. We all know about the headwinds to oil... electric cars, working from home, etc. and, as I've said, I see these as gradual, long-term trends that should significantly exceed the current "cycle". There's also Joe Biden, who could help offshore drilling by trashing the onshore shale frackers... but who also could hurt oil by easing up on Iran and letting them export lots of oil and build nuclear bombs again.
But another thing to note, are the increasingly tight, global restrictions on emissions, and the resulting restrictions on high-sulfer content and/or heavier crude oils. That's actually good news, because a much higher percentage of light, sweet crudes are in viable offshore reservoirs. In South America, for example, on-shore fields in Peru, Columbia, Equador, and the granddaddy of them all, Venezuela, are mostly all heavy, sour crudes. But go offshore to the massive, pre-salt, deepwater fields off Brazil or the new, exciting offshore finds off Guyana, and it's all light, sweet crude that the refiners all want.
And that's mostly true world-wide. Older, offshore fields off Nigeria are extremely light crude known as Bonny Light. The north sea, where most of Transocean's harsh-water rigs are working, is also lighter crudes, and Norway is implementing very big financial incentives for oil companies to drill due to the Covid pandemic (basically the opposite of what Biden and AOC want to do in America).
Anyway, that's about it for this posting. Any questions or commentary in this thread is welcome.
S
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Post by birdnest on Nov 9, 2020 18:59:48 GMT -5
Great write up S I watched RIG trade this morning around 1.19 and sold off the rest of the day on 42 million shares. The volume was not that high considering what it normally does. It is nice to see it above a buck. Do you see it climbing now that it closed above a buck?
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Post by Blitz on Nov 10, 2020 11:48:15 GMT -5
I can see Biden putting much stricter restrictions on fracking. That would help RIG and it would reduce the supply of new oil coming from dry land. As for electric cars denting oil demand anytime soon... It's not going to happen anytime soon. Perhaps 20 years out and maybe longer? Right now it's all sound bites and tree huggers making a lot of 'happy noise' to their ears. //////////////////////////////// Can electric cars kill crude oil demand? Crude oil is the key source of energy, which is the heart of all economic activity and growth Vinni Malik - Oct 30, 2019 Senior manager - Commodity trading and risk management, Publicis Sapient energy.economictimes.indiatimes.com/energy-speak/can-electric-cars-kill-crude-oil-demand/3851On my recent trip to North America, I was congratulating a friend who had bought a luxury car when he told me that he thought of buying it now as he wasn’t sure if it would make sense in a few years once the electric cars take over. His comment triggered a chain of thoughts in my head and a few questions. Electric cars are a thing of the future (or maybe present) but what happens to the crude oil demand in an all-electric car future? Will crude consumption die out? Or peak out? And when? Crude oil consumption is expected to be a little over 100 million barrels per day (b/d) by the end of 2019 as compared to about 86 million b/d in 2010. An average 1.5 million b/d increase every year since 2010. Simple math would suggest the expected consumption to be about 147 million b/d by 2050. But factoring in the policies that the governments have and the targets that are in place for consuming renewables, switching to electric vehicles, increased energy efficiency, etc, the 147 million b/d should be much lesser. Right? But, how much? Of the current 100 million b/d, more than 60 per cent is consumed for transport only including cars (22 per cent), trucks (25 per cent), aviation (6 per cent), marine (4 per cent), buses, and rails, etc. The remaining is consumed for other industrial/non-industrial uses such as petrochemicals (10 per cent), power (5 per cent), buildings, roads, and agriculture. In this article, we will focus on the transport sectors only, which consume about 60 per cent of the total crude oil and discuss the other sectors as a follow-up. Realistically, when we talk about electric cars, we are talking about a 22 million b/d consumption of oil i.e. 22 per cent of the total consumed by passenger cars. In the next 30 years, we expect the number of cars on the roads to increase by as much as 2.5 times as the world population rises by another two billion and growth in countries such as India and China empowers more people to buy more cars. Putting in an aggressive and passive scenario about electric vehicle adoption (75 per cent adoption in aggressive versus 25 per cent in passive), we are still talking about an 8 million b/d to 24 million b/d consumption in 30 years by cars only. The second big factor that will play an equally important role as electric vehicles, is the increase in fuel efficiency of motor vehicles. Going by recent trends, an average 30 per cent efficiency gain can be assumed by 2050 for all vehicles. Factoring that into our consumption scenarios above, we are still talking about a 6 million b/d to 17 million b/d consumption of crude oil by passenger cars in an aggressive and passive scenarios, respectively. Ending up somewhere in the middle would mean a 10 million b/d to 12 million b/d consumption of crude oil by cars by 2050. Considering North America and Europe will switch largely to electric cars by 2050, what’s critical is how countries like India and China enable the adoption of electric vehicles in the next 10 years. China is the world’s largest electric vehicle market and has set in aggressive policies for its adoption by 2030. Considering all of this in total, 2050 could see a significant drop in crude oil consumption by passenger cars. But, before we start getting too happy about this, let’s discuss the other modes of transport as well. How often do we hear about electric trucks or electric aeroplanes or electric ships? Trucks, both light and heavy, are the largest consumers of oil comprising of about 25 per cent of the total oil demand. Even though there is some progress in regions such as North America where companies have started focusing on electric trucks, other regions are still way behind. Aviation and marine together consume about 10 per cent of the total produced. Assuming all buses (3 per cent) globally will go electric by 2050, most of the world still has no alternatives to crude oil for other transport and still expects a significant growth in demand. Factoring in a moderate growth scenario in the number of trucks globally, an expected doubling of the global aircraft fleet and the number of ships until 2050; we should still expect about a 10 per cent to 15 per cent net increase in crude demand by trucks (even after factoring fuel efficiency gains and percentage conversion into electric/hybrid) and about an 80 per cent to 90 per cent total increase within aviation and marine transport. The table below summarises what we can expect across the transport sectors by 2050. Crude oil is the key source of energy, which is the heart of all economic activity and growth. Land, sea and air transport, power, industries, agriculture and even housing are all dependent on energy. And energy is also one of the key sources of carbon emissions. Even though the governments globally are pushing for adoption of electric passenger cars and setting aggressive adoption targets,it focuses on only one-fourth of the problem. The demand in all other transport sectors will increase. We need to create more alternatives in these sectors such as trucking (land freight transport), jet fuel, marine/bunker fuel and enforce faster adoption policies in these areas for the demand of crude oil to even peak out in the next 10 to 20 years at the minimum. Even then, oil is likely to remain a significant source of energy for the transport sector. Thus, no death of crude oil!
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Post by Blitz on Nov 10, 2020 11:56:13 GMT -5
Here's an excerpt from "Green Technology" www.green-technology.org/magazinenews/electric-vehicles-oil-market/Given the dominance of internal combustion engine passenger vehicles, which include cars, SUVs and light trucks, replacing them all with electric models will take decades. Automobiles are durable goods that typically remain on the road for 10 to 15 years. Not all drivers will buy a new car, let alone an electric one, soon. In other words, even if (hypothetically) all new car sales were to instantly turn electric, it would likely be sometime after 2030 before gasoline cars would disappear. Besides, passenger vehicles consume only about 26 percent of the oil used worldwide. Given these stubborn realities and the fact that electric vehicles still represent a tiny portion of new-car sales, reaching a peak in oil demand by 2040 would require more than widespread conversion to electric-powered cars. But together with other trends taking shape, electric vehicle growth could potentially revolutionize transportation enough for oil consumption to stop growing within this time frame.
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Post by bjspokanimal on Nov 10, 2020 21:19:18 GMT -5
@ birdnest; I see Transocean climbing substantially over the next few years. I have no idea whether or not it'll climb over the next 6 months but I see the advent of covid vaccines as being a positive driver. @ Blitz; I see the encroachment of electric cars and alternative green energy energy as a long term certainty but I DON'T see those developments as seriously interrupting the current oil cycle. There will be another oil up-cycle (boom?) before the encroachment of alternative energy is significant enough to interrupt traditional oil cycles. There could even be another bust/boom cycle after we recover from the current one, but that is one that we'll have to assess when the time comes to do that. Who knows what the potential of a company like Transocean will be when THAT day comes... likely many, many years from now.
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Post by Deleted on Nov 11, 2020 2:49:55 GMT -5
I don't know about anyone else but here in the northeast every other day I see at least one or more Tesla vehicles on the road which is surprises me. It's usually the smaller less expensive vehicle but none the less i'm amazed to see so many Tesla vehicles on the road.
Anyone else out there see many Teslas on the road?
And I never owned the stock unfortunately.
I was looking at a stock a few months ago with the symbol NIO when it was about $3.50, it's supposed to be the equivalent of CUSA's Tesla, don't own it but it's $45 now, OUCH!!!!!!!!. Just one more of he many stocks on my radar that I missed, I hope someone on this boaard bought it..
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Post by Blitz on Nov 11, 2020 10:12:22 GMT -5
Here in Miami Beach, I see several Teslas per day, however, those sightings need context. The first Tesla roadster came out in 2008. So, let’s say sales started for real cars in 2010. That’s roughly 10 years worth of car sales to mostly rich people which makes them relative to other cars... rare. People notice rare cars more.
I see more Ferraris, Lamborghini's, and Rolls Royces here. I see each with about the same frequency as I see Teslas.
I doubt you’d se many Teslas in Ohio, Oklahoma, Arkansas, North Dakota, South Dakota, Kansas... and lots of other fly-over blue collar states. You won't even se many in central FL. It's an urban commuter and grocery getter.
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Post by CardsFan on Nov 11, 2020 13:08:31 GMT -5
There are 4 Tesla’s just in my apartment complex. Last year there was 1. And I’m in North Texas. I live in an IT/medical hub. Very diverse, probably 80% foreigners
ill have to to rethink RIG hear. The comment above above land fracking limitations may dive increased drill ship use. But, my counterpoint would be what I heard on NBR call about their Saudi JV. The saudis have halted/delayed most new builds until 2022. And I’m guessing any capacity we lose in fracking will be made up onshore in foreign markets.
dont have an answer yet, but RIG could definitely trade higher on momentum if nothing else.
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Post by Blitz on Nov 11, 2020 14:23:22 GMT -5
ill have to to rethink RIG hear. The comment above above land fracking limitations may dive increased drill ship use. But, my counterpoint would be what I heard on NBR call about their Saudi JV. The saudis have halted/delayed most new builds until 2022. And I’m guessing any capacity we lose in fracking will be made up onshore in foreign markets. dont have an answer yet, but RIG could definitely trade higher on momentum if nothing else. IMHO, RIG should trade up with increased demand for oil. That should happen soon due to effective vaccines and treatments for Covid as well as the realization you just can’t shut everything down just to protect the roughly 1% it kills. People not being afraid to travel by air will be a big driver too. Jets burn tons of fuel per trip...
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Post by CardsFan on Nov 11, 2020 14:31:21 GMT -5
I hear ya blitz. I just own a ton of energy. So adding more is a huge risk for me. I’m actually aiming more for beaten up growth names now that everyone is dumping them. And the same things that drive rig higher would drive my other energy names higher, so most likely, I’ll just sit on the sidelines and cheer the other rig owners in this board on.
For time being, I’m too busy researching, betting on health tech names
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Post by bjspokanimal on Nov 11, 2020 16:59:22 GMT -5
I learned a hard lesson back in the later 1980s.
I was looking at the booming area of client-server computing, and I was also looking at a company that specialized in selling bolt-on middleware for IBM mainframe computers. Client-server was all the rage for a future where folks said that "dinosaur" IBM mainframes would disappear.
Turns out that for the ensuing half-decade, the mainframe middleware company did best.
Why? Because people using IBM big-iron were looking at very large capital outlays to convert their operations to client-server platforms. They found that they could greatly minimize their overall computing costs by optimizing their mainframes with high-ROI middleware and put off the client-server decision until the ROIs of doing so were more compelling more than a decade down the road in most cases.
One of the hundreds of research exercises I've done relevant to oil in general and RIG in particular, was to evaluate the Total cost of ownership of an electric vehicle, and how that cost is evolving as technologies develop... "net" of the technologies of hydrocarbon extraction and refining. That involved the difference in price of an E.V., the cost of their daily electricity consumption relative to gasoline, necessary periodic battery replacement, and how people view the added length of time to re-charge batteries during longer trips relative to a quick, gasoline fill-up.
In the end, all things considered, the evolution of E.V.s is not only similar to the evolution of client-server replacement of mainframes and super-minis, but globally speaking, it's progressing much more slowly. Contrasting that with the current oil-cycle's depletion rates without new discovery replacement, and how that impacts the current oil cycle's rate of transformation relative to the FAR slower transformation of E.V.s vs gas/diesel/propane/kerosene consumption trends... E.V.s amount to only a minor impact on the current cycle and likely less than a moderate impact on the next one.
Hope that's helpful.
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Post by Blitz on Nov 11, 2020 22:18:27 GMT -5
Electric vehicles only work because they are subsidized. And most people don’t realize just how subsidized they are.
They do not have easily accessed cross country charging stations. Plus who wants get recharged with a 2 hour wait and then have to plan to find another charging station 200 miles out of the way with another 2 hour wait? That’s why they are urban commuter glorified golf carts. They only work with any economic feasibility with heavy gov support.
Not only that... when the subsidies run out for the free charging stations it will cost money to plug in and recharge! And not only that... the sunshine doesn’t charge them... oil fired power plants are the old school tech that recharges them...
Think about that... It doesn’t work without subsidies ... Yay, bs green electric car tech!
Oil stays viable for a long time to come..
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Post by CardsFan on Nov 13, 2020 0:43:41 GMT -5
Spok,
any thoughts on all the Hydrogen hoopla of late? BP just did a big deal. And the entire US supply chain is finally adopting it. It’s not just fringe players like Nikola, but eve companies like Cummins is now on board.
i know it’s more expensive than electrics now, but all the existing pipelines could be repurposed so infrastructure buildout wouldn’t take long, if enough people got on board.
ive got friends at Toyota who tell me a Toyota is betting big on it.
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Post by redbullnvodka on Nov 20, 2020 10:40:55 GMT -5
RIG has shown some signs of life as of late.
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Post by bjspokanimal on Nov 23, 2020 13:20:25 GMT -5
@ ry; I haven't spent a lot of time researching hydrogen but I do know it's near term impact on the current oil cycle recovery from covid is negligible. As a current, major investor in Transocean, my time horizon is strictly confined to the current cycle.
The next cycle, years from now, will warrant a thorough look at how green efforts and alternatives & renewables balance out against the trajectory of oil supply and demand at that time.
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Post by bjspokanimal on Nov 23, 2020 15:47:42 GMT -5
I just (belatedly) learned that Transocean extended a couple of contracts on 2 drillships in Brazil last week.
The extensions added almost $300 million to their backlog. Since they've been fulfilling approximately $600 million of "net" backlog per quarter since Q1, these extensions could cut the Q4 net backlog fulfillment in half, to around $300 million.
Given the importance of their industry-leading backlog for sustaining revenues and keeping their fleet as operational as possible (eg; not "cold-stacked") until the industry recovery accelerates, these extensions are quite material to RIG's outlook.
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Post by birdnest on Nov 23, 2020 16:11:34 GMT -5
I was wondering why it jumped so much today. $1.80 is nice, this stock moves more then the good old days on LVS. I did sell my NOV today but still hanging on RIG... Good luck all.
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Post by Blitz on Nov 23, 2020 18:26:41 GMT -5
I would opine it’s going up because fracking will come under pressure under a Biden administration and support for the Green New Deal. Then oil is rising due to increased air travel and hope due the vaccines...
🤔And the other stuff mentioned... 😎
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Post by redbullnvodka on Nov 24, 2020 8:37:42 GMT -5
This looks like a short squeeze like the one we had in June
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Post by Blitz on Nov 24, 2020 10:21:52 GMT -5
It’s on wild ride today... It hit $2.67 and down to $2.34. Buckle up, buttercup!
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Post by birdnest on Nov 24, 2020 14:16:01 GMT -5
I was going sell but figured I’ll wait a while and see what happens. Almost sold at $2.50 but didn’t, looking now I probably should have - oh well.
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Post by bjspokanimal on Nov 25, 2020 13:37:59 GMT -5
@ blitz; I see Biden's hatred for fracking and his acceptance of some (many?... we'll see) provisions of AOC's Green New Deal as being negligible contributors to the oil price rally. You'll get a lot of that from the Mainstream liberal media, but it's pretty much Crap.
Right now, the big mover for Oil is investors' anticipation of higher demand as vaccinations and herd immunity conquer the corona virus next spring. The secondary contributor is OPEC's developing plan to extend the current cuts in production beyond the January 1st date that was their original deadline to ease the cuts by another 2 million barrels a day.
Issues with Biden are further out an more gradual in the grand scheme of global supply and demand for oil. Personally, in that realm, I think that Biden's plan to go easy on the "Death To America" rulers of Iran, that would likely have a bigger impact (negative) later on. Banning fracking would counteract that with a positive (rising) impact on oil prices. Again, I think the market's looking near term with the current rally and Iran and fracking are further out.
2 things with fracking; The API has said that battling Biden on a fracking ban is going to be top priority. Further, Biden's attacks on fracking will be more effective on public land than on private land, so it's unlikely to be a total ban on fracking unless the environmental whackos can push through something more extremist and that something would likely need to get through the Senate. Regs on public land fall under administrative regs, however, so that's where Biden could do the most damage with reckless executive orders.
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Post by Blitz on Nov 26, 2020 10:15:47 GMT -5
I used to fly Boeing 767s. So, I'm familiar with its fuel usage. Here's an example of what it means to get flying going again as it relates to fuel usage...
The 767 Freighter carries up to 23,980 gallons (90,770 liters) of fuel – enough to fill 1,200 minivans. It takes only 28 minutes to fill the airplane.
Boeing 747 Jet Airliners (model series 100 - 400) can hold approximately 48,400 - 63,700 US gallons of jet fuel.
Some 100,000 flights take off and land every day across the world in normal times (pre-pandemic).
Now juxtapose that with your typical fuel tanker truck making deliveries to your local gas station...
Small tanker trucks have a maximum capacity of 3,000 gallons, while large tankers have a maximum capacity of 11,600 gallons. So, a 767 can take a fuel load equal to 2 large fuel tanker trucks... every time it flies and one can take up to 3 long flights per day.
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Post by Blitz on Nov 26, 2020 10:25:34 GMT -5
Here's what a cruise ship holds... A large cruise ship ranging in length from 900 to 1,100 feet might hold 1 to 2 million gallons of fuel. Smaller vessels, like a 440-foot-long ferry, might carry around 130,000 gallons of fuel, while a gigantic ship measuring over 1,300 feet in length can tote over 4 million gallons. Both size and the average speed a cruise ship travels impact how much fuel it uses. On average, a large cruise ship can use up to 250 tons of fuel per day, which is around 80,000 gallons. Almost all cruise ships are sitting parked in clusters at ocean anchorages right now and only do port visits to facilitate crew changes and provisioning. Here's an example off of the Bahamas. The blue dots and ships are cruise ships... www.marinetraffic.com/en/ais/home/centerx:-78.2/centery:26.3/zoom:8
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Post by bjspokanimal on Nov 28, 2020 10:36:01 GMT -5
There's another "RIG's gonna go bankrupt" blather from Motley Fool today. Same fool that was saying that before the latest earnings report. This author is a guy who likes "momentum"... more momentum, obviously, than the surge in oil prices and RIG's stock price than we've seen thus far. He has also demonstrated that he likes the attention that he gets from being a Gloom-and-doomer type writer. Like almost all Motley Fool authors, he focuses on current stats and the conservative guidance that companies have to report nowadays in order to stay away from class-action lawsuits. As an amateur, as all motley fools are, he allows that kind of "static" thinking to control his brain. His statistics are sound, but he misses the circumstantial points that company brass made in their conference call. For example, the company's projected cash flow for next year is a conservative one that must be based on the monetization of the company's current backlog and monetized at current fleet utilization using current rig dayrates. In other words, it has to hold up in court as being not misleading to investors. What such projections can't consider, however, is the elevated bidding activity on rigs that occurred in Q3 because bids aren't contracts. Q3 bids actually exceeded the bids that were obtained in Q4, 2019 before covid ever happened and they revealed that a lot of E&P companies are nervous about future RIG availability for reasonable dayrates. The bidding banter also compelled the company to project a lot of contract signings during the last half of next year... again, another conservative estimate that presumes that covid-solutions won't raise oil demand before July. In fact, we've already seen concern among E&P companies about rig availability, as Petrobras just extended the contracts on 2, ultra-deepwater rigs, adding almost $300 million to company backlog just last week. What all of this means, is that the company's revenue projections for 2021 and 2022 have about a 5% chance of actually coming to pass... a 5% chance of a meteor strike or the advent of Covid-20. This motley fool doesn't get that... probably because he spends too much time in class-action courtroom proceedings. He also hasn't been buying and selling drillers since the 1970s like I have and is clearly unfamiliar with what happens when an impending rig shortage triggers a leasing panic among E&P companies that need an incentive to make a deepwater drilling decision. One, clear trend over the past 5 years, and past 1 year even more, has been the steady retirement and cold- stacking of rigs globally. Counting all the scrapped jack-ups and drilling barges since 2014, the global fleet today is less than 40% the size it was 6 years ago and there are more going into mothballs every day as bankruptcy judges order older, idle rigs into the scrapyards and companies like RIG quickly warm and cold-stack rigs that won't receive contracts within a tight, 3-month time horizon. Once oil inventories DO get tighter and WTI goes over $50 while brent goes over $55 with strong consumption patterns, there"WILL be a shortage of active and warm-stacked rigs and, if the last 50 years of leasing history is any guide, we WILL see a 50% to 100% jump in dayrates. At that time, the company with the most available rigs and the most liquidity available to activate cold-stacked rigs will be the hands-down winner. When that happens, motley fools like this one will have long ago moved on to their next, doom-and-gloom candidate and we will have forgotten his name by then, like so many attention seekers before him. Here is his article: www.fool.com/investing/2020/11/28/this-could-be-the-next-oil-stock-to-go-bankrupt/
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