Royal Dutch Shell Plc will cut $15 billion of investment over the next three years as the crash in oil prices saw fourth-quarter profit miss forecasts.
Shell, the first of the world’s largest oil companies to report earnings following the slump in crude to a five-year low, will defer or cancel about 40 projects worldwide, Chief Executive Officer Ben van Beurden said today. Exploration will also be curtailed.
I think SDRL will runup slowly. Going to the $40 range is going to take time. But SDRL is strong and can get to the $20s in the coming weeks. Shorts will be covering and the stock price will respond fast.
The bottom of the rig/rate business market may not have been reached. But that does not speak for the SDRL stock price which may well have already overshot a reasonable downside level, based on news, fear and a canceled dividend. SDRL and ESV are now looking promising for the coming couple of years of stock price recovery in anticipation of the business recovery starting in 2016, followed by dividend increases.
From Energy Point's 2014 customer satisfaction survey:
Asia - Pacific Rim - Seadrill
Middle East - Rowan
Sub-Saharan Africa - Noble
Latin America - Mexico - Ensco
North Sea - Ensco
Deepwater Wells - Ensco
Harsh Climate Applications - Ensco
Health, Safety, and Environment - Ensco
Horizontal and Directional Wells - Ensco
Shelf Wells - Ensco
Special Applications - Ensco
Technology - Ensco
HPHT Applications - Rowan
Job Quality - Noble
Performance and Reliability - Noble
Total Satisfaction - Ensco
Customers definitely appreciate all that money poured into the latest and greatest ships and technology.
And this is how most of the "Majors" are slashing cap ex. UDW spending will be higher this year than ever in the past. Check how many UDW rigs are drilling right now as compared to any time in the past. Oh, I should mention that there are many more UDW rigs than at any time in the past. Mid water and deep water is getting cut and those rigs are getting scrapped and replaced by Gen 6 UDW rigs.
I beleave its due to RIG still has not cut div , this is giving the stock abump so to speak. Everytime oil makes a move up RIG seems to move up much more than SDRL. I also think that rig will at least cut div if not sup it, when that happens likley they will trade closer. SDRL has cut divy witch I think is smart . Everyone waiting for the other shoe to drop at RIG then likley 10 also.
I think he has given enough abuse and also suffered from it. He has gone to other boards to spread his insights and that's okay with me. I had him on ignore and just seeing he posted something got me mad, even when I didn't read it. Just seeing that grayed out name was upsetting. So back to the business at hand. I declare the bashers winners by default.
Oil prices have fallen and they won’t be getting up for a long time, according to two major banks.
A recent report by UBS says it will take at least five years before crude oil returns to $90 per barrel, where it traded as recently as last summer. Meanwhile, in a note released Tuesday, Goldman Sachs said it expected oil to stabilize around the $40 per barrel level and then head toward $65 to $70 per barrel by the end of the year.
West Texas Intermediate crude oil contracts settled at $44.45 on Wednesday, its lowest price since March 2009.
According to one trader, Goldman Sachs and UBS have it right. “We’re in a bottoming process,” said David Seaburg, head of sales trading at Cowen and Co. For oil prices to move higher, “it’s going to take significant time.”
Despite a reduction in capital expenditures by oil companies, supply is still projected to go up, said Seaburg. In fact, the U.S. Energy Information Agency reported that American stockpiles are at 407 million barrels, the highest since 1982, when such statistics began being compiled.
“We need to see either OPEC making some sort of decision or some of these companies coming out and making a specific announcement about deep, deep cuts for things to change,” said Seaburg. “Or we need the demand picture to pick up in an incredible way, which is probably not in the near-term horizon.”
Nonetheless, he anticipates more volatility ahead in the oil markets based on his discussions with an oil trader at his firm regarding the industry’s capital expenditure cuts.
“He’s going to be the slowest trader on the desk for the first three months of this year,” said Seaburg. “For the balance of the year, he’s going to be the busiest trader because he expects things to really pick up after all of these cuts take hold and oil begins to climb higher.”
But the technicals show even lower prices ahead, based on the chart work of Todd Gordon, founder of TradingAnalysis.com. He notes that the recent collapse in oil prices is now in its 32nd week, which is about the same duration as the huge drop in oil during the 2008 credit crisis.
Though Gordon doesn’t read too much into the time relationship of the two collapses, he says it’s a sign that the oil market should be on the lookout for a significant event.
And that even may have occurred recently when crude broke below $46 per barrel. Gordon sees that as technically important because it broke through a support line extending from the lows of 2002 and 2009. The next stop down, according to his chart, is at $33.20 per barrel, near the 2009 lows.
“I’ve actually just gone short crude this morning with clients,” Gordon said. “We have a put spread on in the USO, the ETF that tracks oil. We think it goes down to the $33 range…. It had every opportunity to rally. It couldn’t. So the path of least resistance is lower.”