Why You Shouldn’t Fear the Current Storm in the Deepwater Drilling Sector

6,664 views
6,622 views

Published on

It has been a rough year for deepwater drillers like Seadrill, Transocean and Ensco. However, the industry’s current storm won’t last forever.

Published in: Business, Career
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
6,664
On SlideShare
0
From Embeds
0
Number of Embeds
14
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • http://seekingalpha.com/article/2170163-national-oilwell-varcos-q1-2014-results-earnings-call-transcript
  • Source: Bloomberg bits
  • http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTQ3MTcyfENoaWxkSUQ9MjM4OTIzfFR5cGU9MQ==&t=1
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35 and http://www.enscoplc.com/files/presentations/2014/06182014%20June%20Investor%20Presentation_v001_i30ls9.pdf
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35 and http://www.enscoplc.com/files/presentations/2014/06182014%20June%20Investor%20Presentation_v001_i30ls9.pdf
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35 and http://www.enscoplc.com/files/presentations/2014/06182014%20June%20Investor%20Presentation_v001_i30ls9.pdf
  • http://www.seadrill.com/ShowFile.ashx?FileInstanceId=0ff5a331-9092-4faa-8945-705119a83b35 and http://www.enscoplc.com/files/presentations/2014/06182014%20June%20Investor%20Presentation_v001_i30ls9.pdf
  • Why You Shouldn’t Fear the Current Storm in the Deepwater Drilling Sector

    1. 1. Why You Shouldn’t Fear the Current Storm in the Deepwater Drilling Sector Photo credit: Seadrill
    2. 2. “In our view, the energy needs of the 21st century will be satisfied by a combination of growing production from…deepwater frontiers, which had gone from effectively zero to about 9% of worldwide oil production in 20 years.” – Clay Williams CEO of National Oilwell Varco
    3. 3. According to industry estimates, offshore deepwater production will reach 14-16 million barrels of oil per day by 2030 or more than 15% of daily oil supply.
    4. 4. The reason for the growth is simple, that’s where the industry is finding the oil... Source: Transocean Investor Presentation
    5. 5. …and it’s relatively inexpensive to produce. Source: Seadrill Investor Presentation
    6. 6. Yet, despite the strong long-term outlook, the short term outlook is weaker. This has impacted the share price of contract drillers.
    7. 7. One of the reasons for this weakness is due to the building boom undertaken by contract drillers.
    8. 8. That’s a lot of new rigs. For perspective, the rigs under construction by the top three builders combined – Seadrill (20), Transocean (14) and Ensco (8) – are adding what amounts to be another Diamond Offshore or Rowan to the industry.
    9. 9. While that’s a lot of supply in the near-term, longer term the market looks undersupplied with rigs.
    10. 10. Investor takeaway Add it all up and the long-term fundamentals of the deepwater drilling market look robust.
    11. 11. Investor takeaway This is why investors shouldn’t fear the current storm, but embrace it as a buying opportunity that might not last much longer.
    12. 12. OPEC’s Worst Nightmare

    ×