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  • Falling Rig Count Is A Red Herring [View article]
    The market oversupply is 0.7% globally (600,000 bpd) according to Rex Tillerson.
    Feb 23, 2015. 03:31 PM | Likes Like |Link to Comment
  • Falling Rig Count Is A Red Herring [View article]
    T. Boone Pickens said that it's about a fourth month delay.

    The thing to keep in mind is that all shale wells, whether in a "sweet spot" area or not, have incredibly high decline rates (upwards of 70% in the first year according to the EIA). Thus, if rig counts decline, we may still be seeing shale production decline by 2016.
    Feb 23, 2015. 03:30 PM | 4 Likes Like |Link to Comment
  • Analyzing The Impact Of The Petrobras Contract Cancellations On Seadrill's Cash Flow [View article]
    True, and I point out in the last paragraph that the impact will actually be greater than calculated due to the impact of things like the fact that debt payments don't go away.
    Feb 20, 2015. 10:30 AM | 1 Like Like |Link to Comment
  • Analyzing The Impact Of The Petrobras Contract Cancellations On Seadrill's Cash Flow [View article]
    Yes, and Seadrill could certainly see these contracts come back, which would give the company back some of the lost cash flow. At the moment though nothing is certain.
    Feb 20, 2015. 10:29 AM | Likes Like |Link to Comment
  • The Jobs Situation Is Not As Strong As Policymakers Believe [View article]
    All of the charts posted above come directly from the Federal Reserve Bank of St. Louis using information from the Bureau of Labor Statistics.
    Feb 11, 2015. 01:06 PM | Likes Like |Link to Comment
  • Examining Trends In The Offshore Drilling Industry - January 2015 Edition [View article]
    West Navigator is an ultra-deepwater drillship whereas the harsh-environment figure above refers specifically to standard harsh environment jackups. West Navigator may therefore be included in the drillship figure, otherwise this is an example where using proxies doesn't always work perfectly.

    These are the official figures from IHS Petrodata as of January 2015.

    In answer to your question, West Navigator is ready stacked.
    Feb 9, 2015. 09:57 AM | 1 Like Like |Link to Comment
  • Why Declining Oil Prices Are Not Unequivocally Good For The U.S. Economy [View article]
    You bring up some excellent points and I've noted some of what you list in past articles. The layoffs in the steel industry actually came after I submitted this article to Seeking Alpha, otherwise I would have referenced that as a great example of employment that is indirectly supported by the energy industry.
    Jan 7, 2015. 01:16 PM | Likes Like |Link to Comment
  • Do Bears Have It Right About Seadrill? [View article]
    Dayrates for the newest ultra-deepwater drillships have indeed remained above $500,000 and have actually gone up in the past two months.

    The break-even rate for most of these rigs is about $350k per day (I've got the actual number in one of my SDRL articles but I don't have time to look it up right now), thus they're a long way from being unprofitable.

    There are a number of new rigs coming online in 2015 and 2016 but virtually none coming online in 2017. However, as was already mentioned, a lot of the old rigs are due to receive their five-year surveys between now and 2017 and drillers will probably choose to remove these rigs from the market as it won't be economical to perform those surveys.

    I'm thinking 2015 will probably still be a bit rough and 2016 may be too. SDRL is the best positioned of any of the majors to weather through it. The recent deal for the West Vela rig as well as the possibility of a similar deal for West Jupiter will help the company handle the debt. If it does cut it's dividend by 50%, then I will still be sticking with it.
    Nov 6, 2014. 08:03 PM | 6 Likes Like |Link to Comment
  • Could The 'Shale Oil Miracle' Be Just A Pipe Dream? [View article]
    U.S. EIA says that crude oil inventories are down year-over-year.

    Production is rising rapidly and has been over the past few years but it's been largely due to the capital markets being willing to finance unprofitable drilling operations.
    Oct 14, 2014. 02:02 PM | 6 Likes Like |Link to Comment
  • Norway's Telenor Offers High Yield And Growth Prospects [View article]
    Agree with you on Myanmar. I'm working on another article that will explore Telenor's opportunity there in more detail.
    Sep 25, 2014. 08:59 AM | 1 Like Like |Link to Comment
  • Ascendas REIT Offers Growth Potential And A High, Stable Dividend [View article]
    I actually did mention the reduction in rents.

    "Unfortunately, the rent for new leases (meaning the rent that the trust was able to charge tenants moving into space that the tenant did not previously occupy) were lower than the levels that the trust was able to charge in the preceding quarter for all properties except for high-spec industrial ones. This is something that investors will want to keep an eye on going forward as continued weakness here may be an indication that the Singaporean economy is beginning to slow. This is supported by data released by the country's Ministry of Trade and Industry, which stated that the country's GDP growth was 2.1% year-over-year in the most recent quarter compared to 4.7% in the previous quarter."

    The income that they bring in is not declining though. Ascendas REIT's revenue went up year-over-year. Remember that these are long-term, multi-year leases. The company does have a lot of leases coming due over the next two years but market rental rates are higher than they were when these leases were signed so there's still the likelihood of positive rental reversions.
    Sep 22, 2014. 02:30 PM | Likes Like |Link to Comment
  • Pacific Drilling Second Quarter Results Show Growth Story Playing Out [View article]
    You're correct. The first six months of a rig's operations is typically called the "break-in" period. Rigs are typically less reliable during this period and will suffer from lower revenue efficiency and uptime.
    Aug 29, 2014. 12:08 PM | 1 Like Like |Link to Comment
  • Pacific Drilling Second Quarter Results Show Growth Story Playing Out [View article]
    Off the top of my head, I have to share the comment of jackmaster20. Pacific Drilling looks set to pay a dividend of about $152 million in 2015. This should give the stock a dividend yield between 7-8% at its current level.
    Aug 28, 2014. 09:14 PM | Likes Like |Link to Comment
  • Understanding The Current Conditions In The Offshore Drilling Industry And Understanding Future Trends [View article]
    Thanks for your insights!

    I agree with you that we'll be seeing some "right-sizing" of fleets going forward. I think that we will be seeing cases where offshore contractors are retiring older fourth-generation drilling. There also seems to be some bifurcation in the market where sixth- and even seventh-generation rigs are much more in demand than fifth-generation and older rigs. This is the reason why I recommend sticking with those companies that boast newer fleets - they can typically demand higher dayrates and generate better cash flow to their assets.

    Mexico's opening of its waters will definitely increase demand for rigs, as will increased drilling in the Norwegian and Russian Arctic.

    There's also another development that could prove positive for demand. That's the recent agreement between CUPET and Rosneft to develop the resources in the Cuban continental shelf. By some estimates, there's as much oil there as there is in the Bakken... it's all shallow-water though, so it would likely be mostly jack-up rigs seeing the increased demand. We could see that start to play out.
    Aug 21, 2014. 12:11 PM | 1 Like Like |Link to Comment
  • Seadrill's West Saturn Contract Promises To Deliver Forward Growth [View article]
    On July 9, Seadrill said that it should have about $1.5 billion in cash by the end of July, so my guess would be that the money showed up in the second quarter or it showed up in the first quarter and is included in that $912 million total with the rest of the $1.5 billion coming from other sources.

    The company also stated that the original purpose of that $1 billion convertible bond issue was to fund the construction of newbuilds. Then that bond issue was cancelled and management said that the company had enough liquidity... so maybe you're right, maybe the company will just use the cash on hand to finance this rig.
    Aug 13, 2014. 02:26 PM | Likes Like |Link to Comment