Excerpt from our One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):
Oil Rigs Stage Exodus From Gulf of Mexico
Summary: The Energy Information Administration expects the price of natural gas in the US to rise from $6.10 per BTU today to over $10 by the end of 2007, because drilling rigs in the Gulf of Mexico are being transferred to more lucrative markets. That will reduce natural gas production and drive up prices, which are determined by local supply and demand in contrast to oil which is a global market. The number of rigs in the Gulf of Mexico has fallen from 148 in 2001 to 90 now, and the number is expected to fall further as more rigs are sent to the Persian Gulf where oil companies are offering higher day-rates for rigs..
Comment on related stocks/ETFs: Rig operators mentioned in the article that benefit from the rise in day rates include GlobalSantaFe (NYSE:GSF), Ensco International (NYSE:ESV), and Transocean (NYSE:RIG). Gulf of Mexico oil producers that could be negatively impacted by higher drilling rates include BP (NYSE:BP) and Apache Corp. (NYSE:APA). The rise in drilling rates is broadly positive for the energy infrastructure stocks.