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Transocean Ltd. Message Board

ejschultheis 21 posts  |  Last Activity: Nov 26, 2014 4:14 PM Member since: Oct 3, 2000
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  • In normal times it would be hard for the market to absorb all of the new rigs coming on line in the next two years. But this isn't normal. Fracking has added nearly 3mm bbls/day to a well supplied market and now prices are dropping as Saudi Arabia tries to maintain market share (they need to continue to sell U.S. 1mm bbls a day to remain relevant). For the past 40 years politicians have said that they want the U.S. to be energy independent. The Saudies must sell the U.S. at least 1mm bbls a day to be relevant. If they could sell 10mm bbls to China France or Germany it wouldn't be enough. They will never come to the rescue if they needed help. Only the U.S. would. Therefor they will continue to drop prices until they are sure that the U.S. will continue to purchase their oil.

    Fracking costs continue to drop like a rock. I read an article in the past few weeks that drilling time have dropped from 30 days down to 4-5 days. (one 10000 ft well was drilled in just over 100 hours). In addition fracking has become much more controllable and is now done in 50-60 stages with some wells at over 100 stages with much better results. In the past many wells started production at near 1000 bbls a day and some of the later wells coming in north of 7000 bbls/ day. Faster speeds/better understanding of the geology and more accurate fracks are dropping the average cost very quickly.

    Offshore rigs need 30 years or longer to payback their costs. In the past oil companies were able to plan 10-15 years ahead but today its nearly impossible to predict what will happen in the next three years.

    Fracking will continue to develop in various basins in the U.S. Mexico and Argentina with major shale
    opportunities will start development in the next few years. Throw in England / China and other lesser opportunities and you get some very serious competition for the offshore industry.

    The Offshore industry is over leveraged and over supplied.

    good luck

  • Thanks in advnce.

  • to 55% in September. oil has come down another $15 since. How will they earn a profit at these new levels? Debt will crush this company. Old lines were at libor plus 1-3% or about 4% new debt is 11% oil is dropping and a larger portion is unhedged.

    Good Luck

    no position

  • Reply to

    Earnings

    by form1_fan Nov 12, 2014 5:07 PM
    ejschultheis ejschultheis Nov 12, 2014 7:56 PM Flag

    WHATS NOT TO LIKE??

    Last year sales were $7.6mm and during that quarter Relm had two press releases announcing $1.7mm contracts with public safety agencies and another press release showing $1.2mm in military sales. Both were expected to be fulfilled in the 3rd quarter of last year. Subtract those lumpy contracts from 7.6mm and you get $4.7mm ordinary (non lumpy) sales. This past quarter we had no announced (lumpy) contracts but sales grew to $8.6mm. Thats up 83% when you adjust for the lumpy contracts.

    Most on wall street will just look at the top line and miss the great improvement in base sales. It should take another quarter or two to confirm this trend but as of now, it looks to me, that the market and customers are increasingly accepting the value proposition that Relm products offer.

    I don't know when or if Relm will get the 5-10mm lumpy contracts we all hope for but I do expect to see more of the 1-2mm contracts on a more regular basis as the market shows further acceptance of their P-25 products.

    Lets look for some additional good news on the call.

    Good Luck

  • I believe that Relm had some backlog carried from the 2nd to the 3rd quarter. In addition I believe they may have had a good quarter even without the $1mm plus orders that are usually announced. I believe that will do north of 10mm in revenues and earnings in the 7 cent range. That would put revenues up 30+% yoy and earnings up more than 50%.

    I would still like to see some major announcements in the 4th q but this is usually one of the slowest quarters of the year. If the company can achieve my revenue target for the 3rd quarter without any major announcements it will show some real traction with their products that were released in the past few years.
    The stock should react quite well. The market should be willing to pay more for a company with steady growth than one with lumpy revenues.

    Good Luck

  • ejschultheis ejschultheis Nov 4, 2014 10:56 AM Flag

    U.S. oil production up 2-3mm bbls/day over past 5 years because of fracking. They also produce copious amounts of NG keeping NG prices near record low prices. Google oil produced in North Dakoda / Permium basin/ or wolf camp.

  • been in and out of this company 4x last year. Made money each time (just Luck).

    Fracking has changed the landscape for this industry. Always uncertainty in this long lead time industry but fracking has lead to much more supply uncertainty than we have seen in decades.

    For the last 40 years politicians have wanted energy independence. If we have independence then we don't have to worry about situations in the middle east.

    Look at this from the Saudi side. If we allow the U.S. to gain independence then they wont have our back.
    Keep production high enough that they(U.S.) slows oil sand and fracking production. Keep prices low enough that the U.S. continues to purchase at least 5ook bbls Saudi crude. If the price falls to 65-70 so be it. Oil projects world wide will be delayed or postponed (especially marginal projects).

    Fracking costs have dropped much quicker than anyone expected over the past two years. If this continues then break even levels may drop to 50-55 in a few years. Saudi prices will follow lower.

    These events will keep daily rig rates lower and with excess supply on the market prices can plummet. Just look at the shipping industry. Dry ships was trading north of $110 a few years ago and they sold 250mm shares at about 1.40 last week.

    Many weaker more highly leveraged players than rig. They will be desperate to release rigs to cover interest and principal payments. To get an idea of how far prices can fall just look at the dry baltic index over the last 7-8 years. RIG rates are no where near a bottom.

    Stock & bonds in this industry will keep falling, You have a better chance with Detroit real estate than rig prices rising.

    Good Luck

  • ejschultheis ejschultheis Oct 31, 2014 6:53 PM Flag

    ONLY 11MM OUTSTANDING.

  • Reply to

    Should be an interesting call

    by o08o.ugh64w Oct 30, 2014 7:54 AM
    ejschultheis ejschultheis Oct 30, 2014 9:21 AM Flag

    ANOTHER DISAPPOINTING QUARTER. I have lost count of the number of quarters that missed management expectations. The stock is down to value levels but may remain at these levels for years.

    I continue to hold but this stock has been a drag on my portfolio for years.

    Inventories were up yet management on the last call expected them to fall in the second half.

    Looks like they repurchased shares at an average price of 3.42

    Im making a big assumption that with communication revenue down to about 2mm that we are at the low for revenues and possibly earnings.

    good luck

  • If option pricing were correct (it usually is close) the stock should drop to about 10 of the election woulld have gone the other war the stock should have risen to about 16. The stock was near 13 last Friday and the calls and puts (friday expiration) were trading at about $1.50 each indicating a break even up or down 3 points.

    I believe that the election will slow latin america growth, push their markets lower, and drag our markets lower in the coming months.

    Keep an eye on the bond spreads that PBR bonds trade above their U.S. equivalent maturity. PBR is an over leveraged company with falling commodity prices. Their capital spending plans demand tens of billions in additional debt funding. If capital markets loose faith in the ability of this company to earn a respectable rate of return they will not buy the additional debt and may start to sell current holdings. the first sign of trouble will be the wider bond spreads.

    good luck

  • tHE COMAPNY MAY NEED TO RAISE 150MM AND ROLL ANOTHER 200MM IN BONDS TO KEEP 200MM cash on hand. Bonds currently yield about 17%. I don't know what other assets they could sell. You would think that they have already considered the alternatives and were not able to raise the cash from other sources. Thogh to sell stock at sub 2 when the B/V is above 6. Good Luck

  • RWC closed at 4.18 on the last earnings release. The company has $2.00 of working capital and no debt. You are paying only about 2.20 for the future earnings at these levels. The company has had good sales these past 2 quarters and I expect 9-10mm this quarter. Earnings will get about 6 cent per share boost next year as amortized software costs drop to nearly zero from nearly 900k in 2013. with just a little more growth RWC could be earning 25 cents per share equivalent to 10x current price less working capital.

    Im using the sell off to add to positions.

    Good Luck

  • CHECK 13 D FILING NOW UP TO 8.4% OUTSTANDING.

  • Reply to

    CLASS ACTION COMING!

    by mbrave Sep 30, 2014 5:04 PM
    ejschultheis ejschultheis Sep 30, 2014 5:38 PM Flag

    WHY A CLASS ACTION?

    NOT DELIVERING PRODUCT TO A CLIENT WHO MAY NOT PAY..

    Down over 100k on this one stock & options but I expected to make much more than that. Its just part of the investing process. This is a start-up in a new industry. Risk/ reward. This one ended on the risk side of the equation.

    At this point just holding.

  • Exxon forced to stop drilling in Kara even though they discovered major field.

    NADL not a us company but will their clients (shell ect) also be barred from working with Russian companies?

  • ejschultheis by ejschultheis Sep 26, 2014 10:03 PM Flag

    FINANCIAL INFORMATION?

    THANKS

  • ejschultheis by ejschultheis Sep 24, 2014 2:01 PM Flag

    STOCK DOWN NEARLY 20% IN THREE DAYS FROM 5.88 TO 4.74.

    OUCH

  • Reply to

    Which is cheaper - shale or deep water?

    by one_smooth_stone Sep 17, 2014 1:32 PM
    ejschultheis ejschultheis Sep 18, 2014 9:19 AM Flag

    You just can't look at the profitability but also the risk. Probably only 3-4 companies could survive the costs that BP had with the accident 4 years ago. This industry has long lead times 5-10 years and you got to believe that since 2010 many majors have been reevaluating the risk. Any accident anywhere (especially in the U.S.) could put your company in jeopardy. A few thousand a day lower costs on an older (possibly more risky) rig is not a good investment on a risk / reward basis. I believe that this industry has another 3-5 years of very slow investment by the majors and that many of the over leveraged will go the way of the dodo. Others that have rigs 25-30 years old will have them stacked and in five years they will then be 30 -35 years old.

    In my opinion, you need to find companies that are not leveraged and will be able to purchase distressed assets from the over leveraged. The whole industry will trade lower for the next 5 years or so unless we get some major disruption in the mid east.

    good luck.

  • Reply to

    We have a strange situation here...

    by form1_fan Sep 12, 2014 7:57 AM
    ejschultheis ejschultheis Sep 16, 2014 10:49 PM Flag

    CHAIRMAN was 76-77 years old when would you retire? Motorola will never buy this company but I could see Thales or even Taser expand their product line with Relm.

    Like the rest of you, I'm still looking for that big contract to send this stock higher.

  • Reply to

    Uh Oh...

    by jsill55 Sep 15, 2014 4:34 PM
    ejschultheis ejschultheis Sep 16, 2014 7:45 AM Flag

    NO BIG DEAL. He probably had a 20k tax liability from the options and his bio shows that he is 50. Just a guess but probably a couple of kids (college age) and its the start of a new school year. Or maybe he just needed a new car. The stock is at a multi year high, can you blame him from taking some profits? This wasn't a million dollars of stock. Of course we wouldn't like to see any selling but it happens from time to time.

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