Doug Sheridan

Size Alone Won't Be Enough for Transocean

MMarkkk, thanks for your post. While offshore contractors do currently enjoy leverage with their customers as you describe, those that do not meet the expectations of customers (for whatever reasons) do not simply receive free passes in the market place because times are tight. The customers that employ these rigs are experts at making sure they have the options they need to execute their programs in the longer term. Should any vendor or class of vendors perform poorly or attempt to unduly take advantage of tight markets, customers eventually figure out how to entice capable new entrants into the market (via long term commitments, etc.) such that the supply and demand picture becomes more balanced. Furthermore, any vendor that does not perform for its customers will find that new competitors will be disproportionately attracted to its markets in an effort to capture its disgruntled customers and unenthused prospects. It's a cycle that has played itself out time and time again in this and other industries, and one that absolutely should be a consideration of thoughtful observers.