Insatiable Long-Term Demand for Offshore Drillers from Majors and NOCs: A Wall Street Transcript Interview with Matt Beeby, Senior Equity Research Analyst of Oilfield Services at Williams Financial Group

Wall Street Transcript

67 WALL STREET, New York - February 25, 2013 - The Wall Street Transcript has just published its Oil & Gas: Drilling Equipment and Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Capital Expenditures and Consolidation Activity - Frontier Exploration and Development - Shale Drilling Capital Expenditures - Oil Price Expectations - Shale Drilling Dynamics - Shale, Offshore and Deepwater Drilling - Oil and Gas Price Divergence - Offshore Deepwater Oil Discoveries

Companies include: Atwood Oceanics Inc. (ATW), Diamond Offshore Drilling Inc. (DO), Ensco International Inc. (ESV), Hercules Offshore, Inc. (HERO), Rowan Companies Inc. (RDC), Hornbeck Offshore Services, In (HOS), Gulfmark Offshore Inc. (GLF), Superior Energy Services Inc. (SPN), Basic Energy Services, Inc. (BAS), Natural Gas Services Group Inc (NGS), Oil States International Inc. (OIS), Exxon Mobil Corp. (XOM), Petroleo Brasileiro (PBR), Schlumberger Limited (SLB), Halliburton Company (HAL) and many more.

In the following excerpt from the Oil & Gas: Drilling Equipment and Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What's your overall sentiment on the space right now? I know you recently spoke about the favorable long-term trends in the offshore space.

Mr. Beeby: That's right. That's really the focus point for us over the past year. You can look at the earnings growth for the offshore drillers at a time when almost everybody across the board is building rigs. You can see that several firms on the smaller side have the opportunity to nearly double their earnings in a span of three to four years.

The demand is out there, and we're seeing longer-term programs that work at a reasonable commodity price; it doesn't even have to be $95 a barrel oil. If you have confidence that oil will be above $80, generally everything across the globe is going to be profitable to the companies that continue to drill.

A lot of the offshore driller clients are supermajors and national oil companies like Exxon Mobil (XOM) and Shell (RDS-A), and then Petrobras (PBR), Pemex, Saudi Aramco on the NOC side. There's really a lot of need to continue to drill. Obviously, the Exxon- and Shell-type companies have to replace reserves, but for the NOCs, a lot of times their economy relies on oil production, and they have to continue to meet their goals.

So there's a baseline of drilling activity going forward, and then given what we've seen in new exploration areas such as offshore East Africa, the Southeast Asia ultradeepwater markets, the Mediterranean, and the core markets of ultradeepwater - Brazil, the U.S. Gulf and West Africa - are all fairly steady, maybe with the exception of Brazil.

I think there is a lot of opportunity and lack of availability of rigs for the next six to eight quarters. To me, the offshore side seems...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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