SDLP rose today, a bit more than 3.5%. That would ordinarily strike me as a noteworthy gain. Unfortunately it isn't!
For this company and others of like type, it's all about contracts. A new contract and the whole world is abuzz, positing it means all is well and there's absolutely nothing to concern us. Yet what you're hearing is the manipulative hue and cry of market manipulators and nothing more.
You see, if you dig more deeply you'll find warm stacked drill ships idled and perhaps a cold stack play too. More of a concern, though, is that where there are warm stacked vessels, there's a greatly enhanced possibility if not likelihood that warm will soon cool off and become cold. And in the case of the new contract (Shell, right?), the day rate is terrible! As in really awful!!! There'll be no money made on this new deal.
So we are essentially right back where we were a few weeks ago except that now we know not to expect the world to change overnight.
And should anybody be doubting the veracity of my stance, the fact is that SDLP did not move in lock step with other gainers in the energy sector. It need not reflect so, but if would be welcome for all were we to find SDLP move up 4% or more in a single day. And then we need to see it as the first of a number of sustaining steps to the upside.
I could believe it happening but just not yet. I'm, thinking there've got to be some things happening before the investment community will actually believe there's hope for offshore.
So, for now.......we wait and hope and wait. But we don't allocate fresh cash until there are firmer details justifying investment.
