Another Deep Dive in Offshore Oil

Drilling Deep for Offshore Value: Part 2

We first discussed the market for offshore oil drilling in April 2017. We noted then that the bottom may not have been reached. However, we also noted some companies  to keep in mind when the cycle does turn, as they have a history of paying significant dividends.

Several months later, there are signs that the bottom may be near. Companies are starting to reactivate some cold- stacked rigs. New contracts and extensions are being offered for other rigs too. The pricing on these  latest deals is nowhere near what the industry was earning even 3 years ago, but it is a start. Companies are taking their medicine and going through asset sales, debt restructuring, and scrapping non-viable rigs.

We urge readers to review our April 27 issue of Thursday Thoughts for a primer on this update.

  1. Of the 7 major oil companies whose capital spending we tracked, 4 are now talking about boosting spending and highlight offshore drilling for
  2. The backlogs of the offshore rig companies are no longer in free-fall.
  3. Oil demand is rising at an accelerating rate and inventories are declining.
  4. The offshore rig companies have culled almost half their rigs at this point
  5. New contracts are starting to be
  6. Seadrill’s (SDRL) restructuring is complete and Alaska is being reopened for

Read the rest of the article here…