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Frontline Ogles OSG
Ruthie Ackerman, 07.11.08, 3:50 PM ET
For months oil tanker operator Frontline has been eager to acquire rival Overseas Shipholding Group. But now that OSG is trading at a steep discount Frontline’s hunger to gobble it up is taking on a renewed urgency.
On Thursday Frontline reported, in a filing to the U.S. Securities and Exchange Commission, that it entered a forward contract with DnB NOR to buy 1.37 million shares, equal to a 4.4% stake, in OSG on Aug. 29 for $93.1 million.
Frontline, which has a 5.6% stake in Overseas Shipholding Group, said it would contact OSG's management, board or other major shareholders to discuss alternatives to increase shareholder value, including “combining with or acquiring control” of OSG.
On Friday, OSG shares shot up 5.3% to $79.22 in afternoon trading. But even with the jump in share price the stock is still trading at a steep discount to its net asset value of $117, according to Jefferies, which may explain why its an attractive time for Frontline to make a move.
But there’s at least one barrier to Frontline’s acquisition dreams. The Jones Act requires all commercial vessels operating in the U.S. to be built, owned, operated, and manned by U.S. citizens and be registered under the U.S. flag. A foreign investor cannot own more than 20.0% of the shares of a U.S. shipping company.
Yet if Frontline does manage to buy OSG it will gain the second biggest publicly traded oil tanker company with a relatively conservative debt-to-capital ratio of 47.0%. Frontline’s debt-to-cap ratio is 86.0% and Teekay Tankers is 71.0%.
In March, Norwegian billionaire John Fredrksen, Frontline’s chairman and key shareholder, gobbled up a 5.2% stake in OSG, bringing Frontline and Frederiksen’s total holdings to 9.7%. (See “Frederiksen’s Frontline Looks Overseas”)
The same month Frontline Chief Executive Bjoern Sjaastad told Reuters that the company was interested in industry consolidation and speculation pinpointed OSG as its prime target. Although talks between the two companies took place, a merger never transpired.
In May, Fredriksen-controlled firms reduced their OSG holdings which brought the aggregate stake down to 5.2%.
Reuters contributed to this article.
They are fighting hard to get big a chunk of the German container shipper Hapag-Lloyd. Their opponents are Deutsche Bundesbahn (German State Railways) and a Russian billiardeur :) All three fighting really hard. Interesting to follow what will come up.
FRO/JF is truly amazing!
FRO $62.47 1-Frontline signals interest in Overseas Shipholding
Fri Jul 11, 2008 6:15am EDT
By John Acher
OSLO, July 11 (Reuters) - Crude oil shipper Frontline (FRO.OL: Quote, Profile, Research, Stock Buzz) wants talks with its rival Overseas Shipholding (OSG.N: Quote, Profile, Research, Stock Buzz) on a merger or acquisition, Frontline and its principal owner John Fredriksen said in a filing to U.S. regulators.
Combining Frontline and OSG, which are the biggest and second biggest publicly traded oil tanker companies, would create a world giant with a fleet of 189 vessels and a further 57 on order with shipyards.
Frontline, which has a 5.6 percent stake in Overseas Shipholding Group (OSG.N: Quote, Profile, Research, Stock Buzz) Inc (OSG), has previously held talks with the U.S. based shipper but failed to acquire it.
It said in a July 10 filing to the U.S. Securities and Exchange Commission that it entered a forward contract with DnB NOR (DNBNOR.OL: Quote, Profile, Research, Stock Buzz) to buy 1.37 million shares, equal to a 4.4 percent stake, in OSG on Aug. 29 for $93.13 million.
Frontline said it would contact OSG's management, board or other major shareholders to discuss "alternatives" to boost shareholder value.
Oslo and New York-listed Frontline said those talks could lead to "transactions which may result in (Frontline) combining with or acquiring control in the Issuer (OSG)".
Frontline officials could not be reached immediately for further comment.
In March, Frontline and Fredriksen companies flagged a 9.7 percent holding in OSG. But in May, Fredriksen-controlled firms reduced their OSG holdings which brought the aggregate stake down to 5.2 percent.
In the SEC filing, Frontline said it holds 1.55 million OSG shares equal to a 5.0 percent stake and its subsidiary Bandama Investment Ltd owns 183,400 shares, equal to a 0.6 percent stake, based on 30.73 million shares outstanding.
OSG, with 116 vessels and another 41 on order, says its strategy is to be a market leader in each of the segments in which it operates.
Frontline which has 72 vessels, is the world's biggest independent operator of supertankers, known in the industry as very large crude carriers (VLCCs).
It has 45 VLCCs and another 10 on order. OSG has 20 VLCCs, and together the companies would have more than 13 percent of the current world fleet of about 486 vessels not counting newbuild projects.
Frontline had first-quarter net income of $221 million on revenues of $528 million. OSG had net income of $112 million on time charter equivalent revenues of $376 million.
Frontline shares traded up 2.9 percent at 319.50 crowns by 0935 GMT, valuing the company at about 23.9 billion Norwegian crowns ($4.68 billion).
OSG shares closed at $75.21 on Thursday, valuing it at $2.32 billion. (Reporting by John Acher, editing by Will Waterman and David Cowell)
DOCKF.PK $3.95 New contracts for Dockwise
Bermuda, July 11, 2008 - Dockwise Ltd. announces that seven new contracts have been awarded to their subsidiary Dockwise Shipping in the past few weeks for the transportation of drilling rigs, barges and dredging equipment.
Dockwise Shipping will transport the drilling rig Transocean Nordic, as well as three loads of barges, a yacht hotel and two loads of dredging equipment in 2008.
The total value of the contracts is more than USD 30 million.
All contracts will be executed in 2008 and contribute to the aim of Dockwise Shipping to continuously employ its vessels at the highest possible utilization.
- End -
For further information, please contact:
Fons van Lith
+1441 5991818
Fons.van.lith@dockwise.com
About Dockwise Ltd
Dockwise Ltd. has a workforce of more than 1200 people both offshore and onshore. The company is the leading marine contractor providing total transport services to the offshore, onshore and yachting industries as well as installation services of extremely heavy offshore platforms. The group is headquartered in Bermuda with amongst others operational offices in Breda, The Netherlands. The group's main commercial offices are located in The Netherlands, the United States, China, Korea, Australia and Nigeria. The Dockwise Yacht Transport business unit is headquartered in Fort Lauderdale and has offices in France and Italy. The Dockwise Shipping network is supported by agents in Japan, Singapore, Spain, Argentina, Australia and Italy.
For further information: www.dockwise.com
Frontline eyes $105 mln Q2 gain from heavy lift
Wed Jul 2, 2008 3:11am EDT
OSLO, July 2 (Reuters) - Frontline Ltd (FRO.OL: Quote, Profile, Research, Stock Buzz) said:
* Delivered fourth and final heavy lift vessel to Dockwise Ltd (SBA.DE: Quote, Profile, Research, Stock Buzz), successfully concluding a project of converting four Suezmax vessels into heavy lift vessels.
* Expects net cash generation of $28 million in the second and third quarter, which will enhance dividend capacity, as a result of the deliveries of the third and fourth vessels.
* Expects to record a second quarter gain of $105 million, including deferred gain related to the transaction.
* The total overall gain on the transaction, including gain on issuance and sale of shares and delivery of the four vessels to Dockwise, is expected to be $255 million. (Reporting by Wojciech Moskwa)
Hello Milner. ITCL is a long time hold, and I am not expecting much results at least in next two years. I added some stocks earlier in the spring, and will add a small amount now after the annuals were published. It's financials are not very strong due to low price long term contracts, which were made years ago. Next year at least two of the vessels will become free for spot markets, and hopefully earn better money.
If you consider buying, buy small amounts and forget the stocks. You have several years time to add more, if you see the company is showing growth and progress. I do not expect any quick price rise in near time - but - knowing JF - wouldn't be surprised if such thing should happen.
DOCK/Perdido Truss Spar safely delivered by the Mighty Servant 1
Hamilton Bermuda, 1 July 2008 - Dockwise Ltd. announces that the Perdido Truss Spar was safely delivered by the semi-submersible vessel Mighty Servant 1 on Friday 27 June 2008. The Spar was skidded on board the vessel on 19 May 2008 in Pori, Finland by Dockwise Shipping, a wholly owned subsidiary of Dockwise Ltd.; and was successfully transported to Ingleside, Texas.
Dockwise was contracted on June 1st 2006 by Technip Offshore Inc. for the safe execution of all aspects of the delivery of the 20,956 tons heavy sparbuoy. The total height of the spar is 173.3 meters. The buoy diameter measures 35.97 meters. Dockwise has a renowned name in the transport and installation of offshore structures like production platforms and truss spars. André Goedée, CEO at Dockwise Ltd. comments: "We have the experience and therefore the power to incorporate lessons learned to continuously improve on risk management. Truss spars are very large floating offshore buoys that are transported horizontally on deck of Dockwise's semi-submersible vessels. The skidded load-out over the stern, the transport across and the float-off carry high risks that need to be managed." Dockwise managed these risks in close co-operation with Technip in the engineering stage of the project and followed the procedures and actions closely and precisely during execution. "All named risks on the project, engineering, operational and safety level were addressed and mitigated as far as possible", says André Goedée.
Published: 20:44 01.07.2008 GMT+2 /HUGIN /Source: Dockwise Ltd /OSE: DOCK /ISIN: BMG2786A1062
ITCL NOK 9.00 = $ 1.77
ITCL - Filing of Annual Reports on Form 20-F
Independent Tankers Corporation Limited (the "Company") announces that the following companies have filed the annual report on Form 20-F for the year ended December 31, 2007:
GOLDEN STATE PETRO (IOM I - A) PLC - Owner of Antares Voyager
GOLDEN STATE PETRO (IOM I - B) PLC - Owner of Phoenix Voyager
CALPETRO TANKERS (BAHAMAS I) LIMITED - Owner of Cygnus Voyager
CALPETRO TANKERS (BAHAMAS II) LIMITED - Owner of Altair Voyager
CALPETRO TANKERS (BAHAMAS III) LIMITED - Owner of Front Voyager
CALPETRO TANKERS (IOM) LIMITED - Owner of Sirius Voyager
The annual reports can be downloaded from the Company's website www.itcl.bm -> Investor Relations -> SEC Filings.
July 1, 2008
The Board of Directors
Independent Tankers Corporation Limited
Hamilton, Bermuda
Questions should be directed to:
Bengt Neteland: Vice President Finance, Frontline Management AS
+47 23 11 40 00
Published: 13:44 01.07.2008 GMT+2 /HUGIN /Source: Independent Tankers Corporation Limited /OSE: ITCL /ISIN: BMG4758V1000
DOCKF.PK $3.70
Dockwise subsidiary takes delivery of mv TREASURE
Hamilton Bermuda, 30 June 2008. Following the delivery of mv "TALISMAN" in May 2008, the fourth vessel out of a series of six mv "TREASURE", now joins the fleet of Dockwise Transport, a wholly owned subsidiary of Dockwise Ltd. As was the case with the earlier three, also this vessel is delivered in accordance with the delivery schedule.
The remaining two converted tankers TRIUMPH and TRUSTEE will be delivered at the end of 2008. With the addition of six vessels to the fleet, Dockwise is able to optimize strategic deployment of the 22-vessel fleet to best serve the various markets. More specifically, Dockwise will be able to provide clients with unparalleled flexibility in using various types of vessels, reducing risk and increasing scheduling and contracting opportunities for different clients.
After successfully completing the submerging test and sea trials, mv " TREASURE" has been delivered to the owners on 30 June 2008. The heavy transport vessel is designed to transport complex, high-value cargo like jack- up drilling units and has a carrying capacity in excess of 35,000 tons. This vessel was converted at the COSCO shipyard at Zhoushan, China. During the conversion the entire midship section has been replaced and machinery and equipment were fully revised.
To ensure the most effective way of operating the vessel, Dockwise has appointed Anglo-Eastern Ship Management to provide technical and crew management. As such, the new vessels will operate under the same management systems as the existing Dockwise vessels.
For further information, please contact:
Fons van Lith
Tel : +14415991818
Fons.van.Lith@dockwise.com
Matt. "Pure spam?" If you are really concerned about pure spam on iHub sites, you've got work to do!
Indeed, this board was so popular because of the scarcity of trivial pure spam in its highly informative contents.
GM Stock Lobster. Glad to hear! Here's another sector in offshore maritime industry, which has work to do and is growing steadily: Offshore Supply Vessels (OSV)
An Oil Rig's Supply Chain
By Tom Brennan
Web Editor
cnbc.com
| 27 Jun 2008 | 06:53 PM ET
It’s Friday, so you should know what this week’s investing thesis is by now: clean offshore drilling.
Cramer’s been recommending names like CGV , Oceaneering International , FMC Technologies and Smith International because they’ve turned what is commonly viewed as an eco-unfriendly business into one that’s very, very green.
Today’s pick? Hornbeck Offshore Services . This company makes the offshore support vessels necessary to carry supplies and workers and other materials back and forth to the oil rig. OSVs also help to keep rigs in place during extreme weather, repair them when they’re damaged and prevent spills and other pollution.
Right now there’s both a shortage of OSVs and a need to update those already being used. The shortage allows HOS to charge higher rates, and the need for newer vessels should fuel growth at the company.
There are other factors at work, coming together to possibly push up this stock: Hornbeck has found work in Brazil; there’s decommissioning projects in the Gulf of Mexico to bring in money; and there’s a chance the company could sell off its tugboat and barge business, providing money to buy more OSVs.
Hornbeck is a small stock, though, with only 20 million shares trading. So remember to buy in small amounts, use limit orders and wait for a pullback if you decide to buy.
FRO $70.87 FRO - Completion of an equity issue of NOK 1,071 million
Published: 08:46 26.06.2008 GMT+2 /HUGIN /Source: Frontline Ltd /OSE: FRO /ISIN: BMG3682E1277
Frontline Ltd. (the "Company" or "Frontline") has today successfully completed a private placement of a total of three million new shares to a subscription price of NOK 357 per share. Gross proceeds from the equity issue amounted to NOK 1,071 million (equivalent to approx. USD 210 million).
The share capital of Frontline Ltd. following this issue amounts to USD 194,646,255 represented by 77,858,502 ordinary shares of USD 2.5 par value. Each ordinary share in Frontline Ltd. has one vote in the company's Shareholders Meeting.
The net proceeds from the private placement will be used to finance the acquisition of the five double hull suezmax tankers and as settlement for the delivery of shares in Overseas Shipholding Group Inc. currently covered by forward contracts.
Hemen Holding Limited, a company indirectly controlled by Frontline's chairman John Fredriksen, guaranteed the subscription of 2.3 million shares and was allocated a total of 225,000 shares. No compensation was received for the underwriting. Hemen Holding Limited will after this control a total of 26,304,053 shares constituting 33.8 percent of the issued share capital in the company.
The share issue was lead managed by Carnegie ASA, with Fearnley Fonds ASA, DnB NOR Markets and Dahlman Rose & Co LLC as co-lead managers.
Frontline Ltd.
June 26, 2008
Hamilton, Bermuda
For further enquiries:
Inger M. Klemp: Chief Financial Officer, Frontline Management AS, +47 23 11 40 00
FRO - Possible private placement of up to 3 million new shares in Frontline Ltd.
Published: 16:50 25.06.2008 GMT+2 /HUGIN /Source: Frontline Ltd /OSE: FRO /ISIN: BMG3682E1277
Frontline Ltd. intends to complete a private placement of 2.3 million new shares with an option to over-allocate up to a total of 3 million new shares. The Company will approach professional investors to test the market's interest following the close of the Oslo Stock Exchange today.
Frontline Ltd.'s largest shareholder, Hemen Holding Ltd., has guaranteed the subscription of 2.3 million shares.
The net proceeds from the private placement will, if successful, be used to finance the acquisition of the 5 double hull suezmax tankers which was announced this morning and in settlement of the delivery of shares in Overseas Shipholding Group Inc. currently controlled through forward contracts.
The shares in the placement will not be registered under the U.S. Securities Act of 1933 and will not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of that Act.
This press release does not constitute an offer to subscribe for the shares in the United States.
For further enquiries:
Inger M. Klemp: Chief Financial Officer, Frontline Management AS, +47 23 11 40 76
Frontline Ltd.
Hamiiton, Bermuda
June 25, 2008
Hello Milner. Both are good stocks in right businesses. DOCK is in a very special niche of marine industry, and still in its infancy, but my opinion is that it will grow slowly but still steadily and make good results along the road. Seadrill has grown very aggressively through newbuilds and acquisitions, but I think it has been necessary to gain a good position in drilling business, which is developing and widening very fast now.
It will take time to build a meaningfull position in these stocks, so patience is needed.
The whole market is very nervous and volatile these days, so IMO it is best to build a good position in two-three dividend paying stocks, e.g. Seadrill, FRO and GDOCF. DOCK can reward its investors at least with a nice price rise, as its dividend paying may begin years away.
Dockwise Ltd / DOCKF.pk $3.70
DOCKWISE signs letter of intent with VYBORG Shipyard for 2 float- overs for Shtockmann Gas Field
Published: 14:20 24.06.2008 GMT+2 /HUGIN /Source:
Hamilton, Bermuda, 24 June 2008 - Dockwise Ltd. announces that, through one of its subsidiaries, it has signed a letter of intent with Vyborg Shipyard for the transportation and installation of two topside structures. The topside structures are part of the contract that Vyborg Shipyard signed with Gazflot (the operating company for Gazprom) for the construction of two semi-submersible production platforms that were designed to operate in arctic conditions. Only as soon as Vyborg Shipyard and Dockwise have signed the contract the project will be added to the order book.
The first topside structure is scheduled to be loaded at the end of April 2010 for installation between July and August 2010; the second at the end of October 2010 for installation somewhere around February 2011. The structures will be transported from Geoje Island Korea to the mating location in the Barents Sea. The final mating locations are expected to be in the Murmansk area. The weight of each topside is estimated to be around 22,000 tons.
André Goedée, CEO of Dockwise Ltd., comments: "The strategy of Dockwise aims presence in more phases of the oil- and gas upstream production cycle. This letter of intent can be considered a new milestone in this endeavour but also in the desire of Dockwise to build lasting relationships with important Russian clients. Eventually this could require a more permanent presence of Dockwise in the area".
For further information please contact:
Fons van Lith
Tel : +14415991818
fons.van.lith@dockwise.com
GM Stuffit! Look at FRO, ath $71.75
I must have somehow mixed them in the late hours... considering the outcome next morning..lol
There was a Chinese banker or money manager on the European Squawk Box Show this morning, and he told - among other things - that there really has been a row of European and American bank directors asking for loans bei him. He surely did not mean to be nasty, but somehow the whole interview was really humiliating for the old world. Seems, that China does not have much understanding to our banking/financial troubles...
Thank you for your kind advise, but if only I knew how good icewater tastes, I wouldn't have drunk anything else...lol
GM Stock Lobster. Er...better already, but Harvey and I surely can understand each other well.. lol
I agree with you, certainly there has been speculation in oil price - all you need is to look at the chart. Sure the price rises, when demand surpasses supply, but not like that. Big boys have jumped in.
My opinion is that in selling and buying food stuffs and commodities only real producers and users should be allowed to trade them.
BQI $6.61 Oilsands Quest: Looking to Break Out (Jim Cramer Edition)
by: Robert Ennis posted on: June 23, 2008 | about stocks: BQI
As I wrote on June 3rd, Oilsands Quest (BQI) has now broken out. I'm not an extreme technician and not looking for any kudos, but I am happy for the recognition this powerhouse has finally achieved.
You see, the world clearly needs oil and the companies that are doing their part to solve the problem should be richly rewarded for their efforts. Oil is not water and when it is burned it is gone forever. That's a fact any smart investor can take as truth. What can't be taken as truth until confirmed are terms like speculation and Peak Oil. Plain and simple, oil burns, it's finite, and get used to it!
So, basing an investment on the confirmed truth that oil is finite should yield you some serious gains and that's where Oilsands Quest comes into play. They have the oil, 10 billion barrels of it, and they have the attention as of this week.
Even the street barker Jim Cramer has finally come to recognize this little darling of Saskatchewan. On Friday I had the extreme displeasure of watching him return from break sitting in a mini sand box with oil pylons in it. I got a little bit sick in my mouth when he mentioned my little darling and now I'll tell you why.
He tends to be a little scuzzy and uniformed at best. Here he is pumping my favorite and deepest investment and he doesn't even get the facts straight. A great pumper he is but a fact checker he is not! Ask the kind folks on the IV board if you want facts. That is a community of the most educated and dedicated investors I have ever seen. Pardon my digression and forgive my ramblings I'll proceed to the meat. Jim, you uninformed pumper, Oilsands Quest has had an independent evaluation of Axe Lake. McDaniels and Associates had responsibility for this evaluation and you can read it here.
Wait, I'll make it easy for you - this represents a small portion of OIlsands Quest's land. From the report:
Discovered Resources of Original Bitumen in Place
* Low Estimate (P-90): 1.117 billion barrels;
* Best Estimate (P-50): 1.344 billion barrels; and,
* High Estimate (P-10): 1.547 billion barrels.
Jim, I'd take the high side and maybe multiply it a couple of times If I were you. Suddenly, your little "real estate play" has a third party confirmation and real oil. Make that conservatively 10 billion barrels of oil. But hey Jim, I got a deal for you, you buy it for the real estate and I'll be buying for the oil. Your valuation might factor a 153% increase where mine is looking for 400% at least. And regarding your comment that there is now news coming....oh Jim, how could you? News is coming believe you me. It's coming Jim and it's going to involve a lot more than real estate.
Think Jim, think!
* Winter drilling results
* Joint Venture agreement
* Reservoir testing
* Axe Lake 1,2, and 3
* Ravens Ridge
* Wallace Creek
* SAGD maybe better
* Petrobank donut hole
* Buyout/Merger
Oh Jimmy boy, I'm probably speaking greek to you, but I don't want to make it too easy. Do your homework you owe it to your investors. What if the cap rock issue was really an issue? It's not of course but would you know?
Here is what I believe to be true (not confirmed):
* Oilsands Quest is undervalued by several billion dollars
* Oilsands Quest has 10 billion plus barrels of oil
* Joint Venture agreement is probably sooner that most think
* OIl ain't gettting any cheaper
There is so much upside to this incredible company and management team that it's not possible to cover it all here. As usual, I suggest investors to do their own due diligence before buying.
RIG $154.66 Transocean inks $1.68B drilling contract
Houston Business Journal Monday, June 23, 2008 - 11:52 AM CDT
Offshore drilling company Transocean Inc. has signed a 10-year, $1.68 billion drilling contract with subsidiaries of Petrobras and Mitsui Group.
The agreement covers both companies' worldwide operations.
Houston-based Transocean (NYSE: RIG) said drilling was expected to commence in the third quarter of 2009.
The contract stems from a 20-year capital lease contract with Brazilian state oil producer Petrobras and the Tokyo-based Mitsui Group for a newbuild ultra-deepwater drillship with expected construction costs of about $750 million.
Transocean will acquire the drillship for $1 million at the end of the 20-year term.
Debunking the Offshore Drilling Myth
Posted By:Tom Brennan
The debate over offshore drilling in the U.S. is moot, Cramer told viewers Monday.
The overwhelming concern of environmentalists who fear a massive oil spill is all for naught. Drilling technology – built right here at home – has so advanced as to make the possibility of an eco-disaster virtually nil. If other countries across the globe are digging for oil off their respective coastlines without consequence, why aren’t we?
Cramer pointed to a 1969 spill, off the coast of Santa Barbara, Calif., that set in motion this hyper-negative attitude toward offshore drilling. A pipe removal from a well caused a pressure change so powerful it cracked the sea floor, spilling about 3 million gallons of crude.
But what happened then could never happen today, Cramer said. The technology at our disposal now is capable of controlling and managing an oil well’s pressure. We have subsea trees – FMC Technologies FMC TECHNOLOGIES INC (FTI 80.86) makes them – to regulate the process. We even have 4-D seismic technology to ensure safe drilling.
“This is not a dirty, dangerous endeavor anymore,” Cramer said.
What’s at stake? How about a potential 18 billion barrels of oil and 76 cubic feet of natural gas in these areas where offshore drilling is not allowed. That’s big business for more than just a few companies.
So all week’s Cramer will highlight the companies that make clean offshore drilling a reality. Keep checking back to find out who they are.
Debunking the Offshore Drilling Myth
Posted By:Tom Brennan
The debate over offshore drilling in the U.S. is moot, Cramer told viewers Monday.
The overwhelming concern of environmentalists who fear a massive oil spill is all for naught. Drilling technology – built right here at home – has so advanced as to make the possibility of an eco-disaster virtually nil. If other countries across the globe are digging for oil off their respective coastlines without consequence, why aren’t we?
Cramer pointed to a 1969 spill, off the coast of Santa Barbara, Calif., that set in motion this hyper-negative attitude toward offshore drilling. A pipe removal from a well caused a pressure change so powerful it cracked the sea floor, spilling about 3 million gallons of crude.
But what happened then could never happen today, Cramer said. The technology at our disposal now is capable of controlling and managing an oil well’s pressure. We have subsea trees – FMC Technologies FMC TECHNOLOGIES INC (FTI 80.86) makes them – to regulate the process. We even have 4-D seismic technology to ensure safe drilling.
“This is not a dirty, dangerous endeavor anymore,” Cramer said.
What’s at stake? How about a potential 18 billion barrels of oil and 76 cubic feet of natural gas in these areas where offshore drilling is not allowed. That’s big business for more than just a few companies.
So all week’s Cramer will highlight the companies that make clean offshore drilling a reality. Keep checking back to find out who they are.
Drilling in the Fourth Dimension
Posted By:Tom Brennan
Forget 3-D. 4-D’s where it’s at.
That’s the technology that companies like Compagnie General de Geophysique-Veritas CGG VERITAS (CGV 45.51 -0.75 -1.62%) are putting to use to help oil drillers.
France’s CGV takes 3-D seismic maps and studies the differences that occur over time to give its clients a more accurate picture of a prospective oil field, whether it’s onshore or off. The company’s 4-D approach increases both safety and production capacity.
If Congress were to lift the moratorium on offshore drilling, Diamond Offshore [DO 137.09 6.23 (+4.76%) CEO Larry Dickerson recently told CNBC, these seismic studies would be oil companies’ top priority. It would be a business boon for CGV, especially considering it both conducts seismic studies and makes the equipment necessary for doing them.
Of course, U.S. lawmakers have yet to act. But there are plenty of other reasons to like CGV:
* Revenues should increase as more seismic data is requested for areas off Brazil and in the Gulf of Mexico.
* CGV expects more demand for its services from exploration and production companies.
* The company’s 4-D tech is top notch, and, as a result, less price sensitive.
* CGV’s equipment-making business has a great backlog.
CGV’s seismic fleet is contracted out for 2008, Cramer said, and bidding’s underway for 2009. So the timing’s perfect for Congress to take action and allow offshore drilling. The move would put money in the pocket of CGV – and it’s shareholders.
Drilling in the Fourth Dimension
Posted By:Tom Brennan
Forget 3-D. 4-D’s where it’s at.
That’s the technology that companies like Compagnie General de Geophysique-Veritas CGG VERITAS (CGV 45.51 -0.75 -1.62%) are putting to use to help oil drillers.
France’s CGV takes 3-D seismic maps and studies the differences that occur over time to give its clients a more accurate picture of a prospective oil field, whether it’s onshore or off. The company’s 4-D approach increases both safety and production capacity.
If Congress were to lift the moratorium on offshore drilling, Diamond Offshore [DO 137.09 6.23 (+4.76%) CEO Larry Dickerson recently told CNBC, these seismic studies would be oil companies’ top priority. It would be a business boon for CGV, especially considering it both conducts seismic studies and makes the equipment necessary for doing them.
Of course, U.S. lawmakers have yet to act. But there are plenty of other reasons to like CGV:
* Revenues should increase as more seismic data is requested for areas off Brazil and in the Gulf of Mexico.
* CGV expects more demand for its services from exploration and production companies.
* The company’s 4-D tech is top notch, and, as a result, less price sensitive.
* CGV’s equipment-making business has a great backlog.
CGV’s seismic fleet is contracted out for 2008, Cramer said, and bidding’s underway for 2009. So the timing’s perfect for Congress to take action and allow offshore drilling. The move would put money in the pocket of CGV – and it’s shareholders.
More about the Thunder Horse project:
http://www.rigzone.com/data/projects/project_detail.asp?project_id=20
P.S. That's what Dockwise (DOCKF.pk $3.90) is doing - hauling rigs all over the world.
Thunder Horse may gallop soon
Filed from Houston 6/13/2008 7:08:51 PM GMT Energy Current
USA
NEW ORLEANS: In a conversation with Reuters, Caryl Fagot, spokeswoman for the U.S. Minerals Management Service (MMS), was reported as saying that BP's Thunder Horse field is about to begin early production, with the company notifying MMS that production is scheduled to begin June 14.
When asked, a BP spokesman said that the company had no comment on whether production would begin, adding that Thunder Horse remained on track to begin production before the end of 2008, but declining to give a more specific date or confirm Fagot's comments.
The Thunder Horse field is in Mississippi Canyon Blocks 778 and 882, 150 miles (241 km) southeast of New Orleans in the Gulf of Mexico. When operational, the Thunder Horse semisubmersible will be the largest production semi ever built and one of the Gulf of Mexico's largest producers. Thunder Horse is designed to process 250,000 b/d of oil and 200 MMcf/d of natural gas, drawn from 25 subsea wells. BP is the operator of Thunder Horse and owns a 75 percent interest, with ExxonMobil holding the remaining 25 percent.
Production at Thunder Horse was delayed due to the need for repairs on the subsea manifold. The platform was evacuated after it began to list during the 2005 hurricane season, and equipment was left in a cold state on the sea bed. The subsea equipment was determined to have become brittle and unable to perform under high pressure. BP stated that all subsea components at risk would be retrieved and replaced before production begins.
More about the Thunder Horse project:
http://www.rigzone.com/data/projects/project_detail.asp?project_id=20
P.S. That's what Dockwise (DOCKF.pk $3.90) is doing - hauling rigs all over the world.
Take a look at what kind of rigs there are. Roll the mouse above the rig you want more information about.
http://www.seadrill.com/fleetconsept.asp?mid=18&sid=60
If you want to look at a semisubmersible rig in action, look at this animation link: You can choose a deep water or shallow water rig to watch, how it operates.
http://www.seadrill.com/file_listgroup.asp?iGroupId=109&mid=21Fi
If you want the animation for a drillship or a semi-tender rig, go here:
http://www.seadrill.com/modules/module_6011/drilling_unit_list.asp?mid=21&sid=40
Skål!....hick...Yes, I will. Skål!
Good Morning, Stuffit. Yes, we are celebrating this weekend the Midnight Summer feast here in Scandinavia, sauna-bathing and swimming. Skål!
GM SL. Take a look at what kind of rigs there are. Roll the mouse above the rig you want more information about.
http://www.seadrill.com/fleetconsept.asp?mid=18&sid=60
If you want to look at a semisubmersible rig in action, look at this animation link: You can choose a deep water or shallow water rig to watch, how it operates.
http://www.seadrill.com/file_listgroup.asp?iGroupId=109&mid=21Fi
If you want the animation for a drillship or a semi-tender rig, go here:
http://www.seadrill.com/modules/module_6011/drilling_unit_list.asp?mid=21&sid=40
Long liquid lunch! Remind our financial advisor of this:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=21519766
:)
Drilling is thrilling. Also remember PDE $45.73, DO $130.73 and SDRLF:PK at $31.15, all deepsea drillers. Nabor NE 65.18 is an onshore driller
RIG got a fine contract with BP, five year extension with double dayrate. All this shows that the big producers want to find oil in "calmer seas", even when the exploration/production will be more difficult and much, much more expensive.
Thunderhorse- project in GOM - deepest drilling hole today - will begin its production now in the autumn - production, which was scheduled to start three years ago! This shows, how difficult it is to produce oil from those depths. But the companies are still willing to do it and pay for it.
RIG $148.09 Transocean in 5-yr, $1.06 bln rig contract renewal
Thu Jun 19, 2008 5:06pm EDT
HOUSTON, June 19 (Reuters) - Transocean Inc (RIG.N: Quote, Profile, Research, Stock Buzz), the world's largest offshore contract driller, said on Thursday a contract has been renewed for one of its ultra-deepwater rigs that may be worth as much as $1.06 billion.
The rig will be contracted at a rate of about $581,000 per day, more than double its prior daily rate of $208,000.
The company's GSF Development Driller II, capable of drilling in water depths of 7,500 feet, was awarded a five-year contract extension by a subsidiary of BP Plc (BP.L: Quote, Profile, Research, Stock Buzz), the company said.
Record-high crude oil prices have created increased demand for floating rigs and drill ships that operate in the deepest waters. Contractors like Transocean have benefited as tight supplies have pushed day rates above $600,000 in some cases.
The renewal starts in November 2008. (Reporting by Anna Driver in Houston; editing by Jeffrey Benkoe)
© Thomson Reuters 2008 All rights reserved
It's the Lotto -board! We try to share information here :)
Good, Mrinos. I don't quite understand that UCR/DCR combination, but I red a warning about it here earlier, so I thought to warn you that you go to the website and read what they explain there.
The person who warned said that if oil price stays over $120, DCR stocks become worthless.
They may start a new UCR/DCR round, but I do not quite understand it. Read carefully how it works if you want to use it. It could be interesting, but one has to know well how it works.
Mrinos. Be carefull! Go to the website and read what is said there. This was posted some time ago:
"Indeed, one of the more high-profile ETF embarrassments of late is the MacroShares Oil Up (UCR: 39.72, +0.03, +0.07%) and MacroShares Oil Down (DCR: 0.28, -0.01, -3.44%) funds. While most rival ETFs rely on futures contracts to track the up-and-down movements in crude prices, the MacroShares' funds were more complex, mimicking oil prices by shifting assets between the two portfolios. However, because oil more than doubled in price since the funds launched, Oil Up effectively ended up with all of the assets on its books, leaving Oil Down high and dry. The unanticipated development is forcing the funds to be dissolved on June 25."
http://www.MacroShares.com.
Economics of Oil Futures Trading, Part II
by: Mark Perry posted on: June 17, 2008
EDIT: Read the comment below the article!
From this previous post on the economics of oil futures trading:
$100 Spot Price per barrel + $5 Carrying Cost Per Barrel = $105 Futures Price (1 year)
Now suppose that speculators anticipate rising future oil prices, due to increasing global demand in China and India, and tightening world oil supplies. As in my previous example, let's assume that the increased speculative futures trading raises the price of oil in the futures market to $110 per barrel for delivery in one year, which then also raises the spot price to $105.
Q: What's could be so beneficial about speculators trading in oil futures, especially if they are contributing to both increases in spot prices and increases in futures prices for oil?
As Bloomberg's Kevin Hassett points out, "If speculators know that the price of something is going to go up a month (year) from now, they buy today. If they are correct, they make money, and the price change is smoothed by the higher demand today. By loading up on futures, speculators pulled some of the price increase forward to today. This change is beneficial for society, as it forces consumers to conserve sooner, and suppliers to search for new deposits."
For example, think about what would happen if futures speculators were able to increase the futures price of oil to $110, without affecting the spot price (stays at $100). Consumers would then NOT conserve oil, and suppliers would NOT search for new oil. If speculators were correct about the rising future price of oil in one year, and if consumers and producers did not change their behavior (because the spot price didn't change), then it's likely that the future price of oil would rise above $110, say to $115 per barrel. And that would be an increase in price volatility over time - oil prices would increase to $115 without speculation in one year, instead of $110 with speculation.
By "pulling some of the price increase forward to today," speculators then actually help stabilize oil markets over time, by moving prices in the correct direction and helping allocate resources more efficiently over time. That is, the pain of higher spot prices today due to speculation, would be more than offset by the benefits in the long run, because behavior would change sooner to the increased scarcity of oil.
To paraphrase Walter Williams: "Suppose speculators are correct about future supply and demand conditions and oil will be scarcer in the future, what is the socially wise thing to do now so that more will be available in the future? The answer is to use less oil now. How do you get people to voluntarily use less oil now? By letting the spot price today rise."
Q: Do speculators raise spot prices and futures prices when a commodity will be scarcer in the future? Yes, but if a commodity like oil is expected to be less scarce and more abundant in the future, speculators would lower both spots prices today and futures prices. It works both ways, but speculators don't receive attention when they are lowering spot prices, only when they are raising spot prices.
Q: If oil is expected to be more (less) scarce in the future, is it beneficial for spot prices today to rise (fall)? Yes, and speculators help to make that happen.
Q: Are oil prices more or less volatile/stable over time with speculators? More stable, by pulling some of the expected future price changes forward to today. "Speculation has to be stabilizing if speculators are making money," says Hassett. And the more speculators are correct in their assessment of future market conditions, and the more trading they engage in based on those assessments, the more stable prices will be over time.
Comment:
Muddling
Investor
Jun 17 12:33 PM
My Website
This article misses market dynamics. It explains static market (with relatively stable volume) perfectly. But what happens if there is an influx of new traders/investors? What happens when hedge funds and sovereign investment funds start buying oil futures like crazy? Long term, it shouldn't matter, market will humble anybody, but short term such influx can raise future (and then spot, as you perfectly explained) prices to the bubble values. Now imagine, funds found out that bubble is popping and start leaving future market in droves?