The primary investment risk within the Offshore Drilling sector is no longer oversupply of rigs, but that cap-x budget will fall significantly in 2015 by 15-20%. We expect falling oil prices to shift oil companies’ long-term oil price expectations toward capital discipline, shareholders return, delaying projects and asset divesture.
With falling oil prices follow by cap-x spending, we expect the coming oversupply of rigs to have a severe impact on utilization and day rates from 2015 through 2016 and possibly to 2017. Thus far, day rates have falling on average by 20-25% for UDW rigs and has yet find a bottom. Most recently, Seadrill Ltd. has signed a 3-year extension in Brazil for the West Taurus at an estimated day rate of $502k, down 23.8% from the previous day rate
At $60 you start to price out a lot of critical mass production around the world," said Marina Petroleka, an analyst at Business Monitor International, a unit of Fitch Group. "U.S. shale, deep water in the Gulf of Mexico is affected. It doesn't price out a lot of Middle East OPEC supply."
Analysts surveyed by Bloomberg forecast Transocean profit will tumble 43 percent next year and 47 percent in 2016, before climbing in 2017.
Tumbling oil prices and a glut in rig supply have been a double blow for the owner of the world’s largest deep-water drilling fleet. A four-year low in crude has pushed energy companies to consider spending cuts, which could further damp demand for leasing rigs. Transocean has the biggest exposure to rigs that could go idle in 2015,
Organization of the Petroleum Exporting Countries Gulf oil producers have reached a consensus not to cut oil output when OPEC meets on Thursday in Vienna, a Gulf OPEC delegate told Reuters.
Separately, Saudi Arabian Oil Minister Ali al-Naimi told reporters on Wednesday that these producers have reached consensus on oil output policy.
"The GCC reached a consensus,'' Naimi told reporters, referring to the Gulf Cooperation Council. "We are very confident that OPEC will have a unified position."
Three OPEC delegates previously told Reuters that OPEC is unlikely to cut its oil output ceiling at the meeting, citing high supplies from some members and non-OPEC producers.
Read More › Oil prices lower as market braces for OPEC meeting
Naimi indicated the Vienna meeting will last only one day, Dow Jones reported.
Early rumblings had indicated that the Saudis would move to push for cuts of up to 1.5 million barrels a day to help re-balance the market and lift prices.
"Only a 1.5 million barrel-a-day reduction would help stabilize the price at this stage," Ole Sloth Hansen, head of commodity strategy at Saxo Bank, said earlier to CNBC. "If no action is taken the market will see this as a renewed selling opportunity
Oil could plummet to $35 a barrel next year if OPEC doesn't reach an agreement by the spring, oil price tracker Tom Kloza said Wednesday.
The founder of Oil Price Information Services told CNBC's "Squawk Box" he expects at least a "lip service agreement" from OPEC members Thursday, when they meet to discuss output, but the members will largely ignore it, creating a bigger crisis in about six months.
"When you look at the second half of 2015, that's when you see oil beginning to dwarf demand by about a million, a million and a half barrels a day," he said. "Thirty-five dollars is a possibility if they don't get an agreement next spring because that's when the oil really starts to build and you can have a billion barrels of oil with really no place to put it."
Read More › Oil steadies below $79 as market doubts OPEC cut
At that point, U.S. deepwater drilling and mature shale projects can keep pumping, but shale plays that require significant investment could be cut, he said.
The slowdown in shale growth has already begun, and the growth of the U.S. oil industry could slow to 750,000 barrels a day from earlier estimates of 1 million barrels.
Oil prices have fallen 30 percent from their highs in June.
Kloza said OPEC ministers may agree this week to cut production by 750,000 to 1 million barrels per day, but members will likely produce all they can, and there will be no compliance with the accord, except from the Saudis, Kuwaitis and the United Emirates.
Read More › Saudis to push OPEC to cut output: CNBC survey
Iran, Iraq, and Venezuela are unlikely to stick to an agreement because they are already below their quotas and the production levels they need to support social programs and balance their budgets, he s
VIENNA (Reuters) - OPEC leader Saudi Arabia signalled on Wednesday it was unlikely to push for a major change in oil output at the producer group's meeting this week, a day after Russia refused to cooperate in any production cut.
Saudi Oil Minister Ali al-Naimi said he expected the oil market "to stabilise itself eventually" but did not comment on talks with Russia held on Tuesday, which produced no firm pledge from Moscow to help support flagging oil prices.
Iranian Oil Minister Bijan Zangeneh said some OPEC members, although not Iran itself, were gearing up for a battle over market share and insisted that non-OPEC producers needed to participate in any OPEC-led output cut.
Oil driller will get cream. BHI will trade back under $60
Herbalife LTD.'s Chairman & CEO just picked up 292,454 shares
Michael Johnson, Herbalife LTD.'s Chairman & CEO and a director of the company, recently acquired 292,454 shares of the company. The buys took place at prices ranging from $7.75 to $41.99 per share, on November 25, 2014. Johnson now owns 1,383,736 shares of the company. Johnson operates out of Los Angeles, CA. Some additional info was provided as follows:
Exercise made pursuant to a 10b5-1(c) trading plan entered into by the reporting person on November 6, 2014. Represents a "net exercise" of outstanding stock options. The reporting person received 292,454 shares of common stock upon the net exercise of the option to purchase 750,000 shares of common stock. The reporting person forfeited 457,546 shares of common stock underlying the option in payment of the exercis e price and to satisfy the withholding tax obligation resulting from the exercise, using the closing stock price on November 25, 2014 of $41.99 These options were fully vested as of December 1, 2009.
Herbalife LTD.'s Chairman & CEO just picked up 292,454 shares
Not a chance in hell the Saudi cut production. Saudi & America want to put major pressure on Russia & Iran right now. Oil goes to $60 & oil driller get cream....
This so call deal doesn't get done for at least another 6 months. In the mean time shorts will rule this stock. Should trade back under $60 before any movement back up.
Will cover when itu0027s trading under $60... Remember the deal is a least 6 months away from begin finalized, so shorts will rule this stock for the next 3 plus months.
You should thank God that the Ceo of BHI found a sucker to buy BHI for $78 At best BHI is worth $40 on it's own.
This deal is as good as dead. BHI well trade back under $50 with in a week or so. You should of sold this pos in pre-market. Makes a great short though. I see $40 with in a month