Listening to analysts will get you no where IMO, I also see little chance of day rates dropping, and by the way, since when are we in(or even near) the high point of a cycle? Did I miss the big run up somewhere?
since NE mgt thinks we are not oversupplied (when have they ever been right--they are trend followers) I do believe we should watch carefully about to many rigs.
these idiots can't spend money fast enough and put us into more debt. Can your hear the bell?
suspicious. I guess this guy has a crystal ball into supply/demand, global economic growth, oil prices, not to mention an edge on the oil majors who are continuing to pay top dollar apparently not realizing that we're about to go into a downcycle. I suspect this guy just wants to take a shot and if he's right make a name for himself as clairvoyant. It's like the analyst who said AAPL was going to 1000 right when it peaked at 700 on its way to under 400.
Thats pretty darned bearish.
Global average day rates for floaters were around $370kpd 2 years ago right now. Now they are closer to $550. Noble's stock price has gone (very unevenly) from around 35 to around 39. It's hard to look at how far the rates have come, compared to how far the PPS has come and see where we're way overextended, ripe for a correction.
Secondly, there's a steady trend towards every deepwater well taking more days to drill. This is not a subtle change, what took 60 days in 2000 now takes more like 90. It takes more supply to satisfy demand than it used to.
Does this mean I think they are wrong? Yeah, they seem too gloomy to me, too much an outrider to what folk like MS are saying.
I do think there are some pretty substantial risks to cyclical stocks, as the numbskulls in congress seem to warming up to do that stupid 2011 stunt again, for example. But that's not a supply-based correction, it's the same old, same old.
I think there are some tests coming up for the older rigs and midwater fleet rolling over. For NE this is the offhire Homer Ferrington and the semis in Brazil coming offhire in Brazil in 2014 & 2015.
It can really go two ways:
A) Absorbed into other developing resources (eg Dave Beard is currently at $220k in Brazil, but Clyde Boudreaux is at $417k in Australia)
B) Extended offhire periods and sub $400k dayrates (eg Max Smith)
ESV is dealing with moving their 5000 series rigs out of Brazil and will give some benchmarks. I think there are too many developing deepwater basins for these rigs not to find work, and too few rigs available for their rates not to stay at current levels.
It's really just one more one more test in a series of struggles..if the market is there for the equipment, I think NE will be one of the best suppliers. That said...I'd love to see a 2013 start up for the Homer Ferrington.
man Petro, you should write a blog somewhere re investing in general and drillers in particular, you say more in a few words than all these analysts put together, but most importantly, you don't have a hidden agenda like most of these analysts have......great comment and spot on as usual