Seeking Alpha

Drillers are little more than range-bound trading vehicles for now, Dan Dicker says in urging...

Drillers are little more than range-bound trading vehicles for now, Dan Dicker says in urging investors to avoid the group. Despite excitement over new U.S. finds, the weak price of natural gas will continue to stifle drilling growth until some price recovery past $3.50/mcf arrives. SLB and others have done a good job squeezing growth from international markets, but a robust U.S. market is key for their stocks to take off.
Comments (4)
  • but a robust U.S. market is key for their stocks to take off. See you in 2016.
    20 Mar 2013, 04:37 PM Reply Like
  • As a group if they are drilling gas, maybe. But there are oil plays and niche players that are 100% utilizing rigs. The delta between gas and oil makes the difference. The oil shale play is where the money is for drillers. 7 states are the place to fish.
    RFS
    20 Mar 2013, 06:57 PM Reply Like
  • Cant disagree about the "range bound" comment after looking a the charts. I currently own RIG and added ESV today. RIG sports a 4% yield with its newly announced div. and ESV yields 3.5%.

     

    A perfect way to profit in any range bound stock is to write covered calls in addition to collecting dividends. A worthwhile strategy that you can deploy with both to achieve above average gains. Therefore I would disagree on avoiding the sector entirely.
    20 Mar 2013, 09:01 PM Reply Like
  • NG is $3.96 in the US, Inventories are falling, now down about 20% yoy, producers are hedging, then they will add rigs, NG rig count is starting to rise per Baker Hughes. $4 is the magic number.
    20 Mar 2013, 10:05 PM Reply Like
DJIA (DIA) S&P 500 (SPY)