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New CEO will boost share price....
Lets face it---the previous CEO was a dud. He had been with the company a long time but he did not have what it takes to head the world's largest driller during a downturn. In fact, he should have seen the downturn coming and sold off a bunch of obsolete rigs. But he didn't see it. And, he should have opposed the high dividend forces on RIG. But he didn't and that's why he is gone.
If RIG's chairman is smart, which I think he is, he's got the headhunters out looking for the #1 talent in the world to run the #1 driller. RIG needs a tough guy with big tahonies, experience, and lots of brains. This guy could even become the new chairman if he turns the company around and heads the stock price north.
When RIG announces they have hired the right guy with the right reputation, the stock will bounce 10% to 15% and likely even trip a short squeeze and a run up of 30% or more.
The shorts have some type or arbitrage. At some point in time, their position will become far too risky. There are simply too many potential events on the horizon that can cause this stock to bounce 10-15% or even more. The fighting could worsen in the Middle East, congress could approve removing the export ban, refineries will soon settle their strikes and raise production for the summer driving season, the falling rig counts could take hold and lower production any day now, OPEC could announce a 2 mil barrel/day reduction in their current quota, the negotiations with Iran could collapse, and more. We could even see 2 of the scenarios jump up at the same time.
As far as running out of room to store crude... this simply is not going to happen. Crude buyers are storing because they expect to make a big fat profit when crude bounces back. They are betting billions. I trust their judgement. The BS about running our of storage is just BS. Even if everything stays the same, there will be storage capacity until July. I also think a lot of new storage is being added. I even believe that a few big investors might even be opening up some large salt dooms that could hold a hundred million barrels or more. In other words, a storage shortage is a fallacy created by the shorts.
More over, Wood Mackenzie just released a report that says that the average exploration cost will fall by 1/3 due to many different factors no one is talking about. Things will be tough the rest of the year but will boom in 2016. Said differently, producers will get more for their money if they continue to drill in this down market versus waiting till the market heats up and drilling prices go up. I agree. The majors have 5 to 10 years plans. They would be foolish not to drill during this downturn while prices are cheat. This will get RIG through this temporary crisis.
Wood Mackenzie Report
In addition, RIG's bankers are not going to pull the rug out from under the World's largest driller and force a bankruptcy. What a silly rumor by the shorts. Not to be patient with RIG through the downturn would be financial suicide for the bankers. RIG will get lean and mean and come out of this downturn with flying colors. Rig might even buy out a few stumbling drillers and emerge much stronger than ever before.
The selling yesterday was way overdone. Lots of nervous traders didn't want to hold RIG over the weekend. They being buying back in Monday.
I predict share price will be at least $25 by the end of 2015. That about 65% return on your money from today.
I see RIG selling for $200 share in 5 years. That 13 times current prices. $100,000 invested now will turn into a $million in no time.
Load up the truck and enjoy the ride!
I can't believe my luck. Loaded up 10,000 shares of RIG at $14.50. I'd like to buy some more. Anybody know how long it takes to mortgage a 110 acre farm in Tennessee? I need several hundred thousand so I can scoop up some more RIG before this puppy gets too high.
I do feel bad for all those dumb sellers. Poor souls dump out so cheap --- on well... its just my luck day.
I also been thinking that RIG will announce a new CEO within the next fee weeks. Bet this pick a top man with a good reputation that should boost the share price at least $5.
Watching SDRL trade: It's tracking USO. It wants to fly north, but seems to be afraid. Another strange thing is that the oil service sector seems totally unconcerned about the massive buildup of inventory. I wonder why?
Buy all you can and hold on tight! Deep water is the only place oil companies can find major reserves. These projects are long term; they will move forward regardless of the current price of crude. The only problem now facing the drillers is that production companies are looking for a big price break before they sign a drilling contract. They also want the best equipment. SDRL has the latest up-to-date fleet and will get contracts at higher prices than anyone else. Other drillers will be forced out of business. Older rigs will have to be scrapped. Small competitors will drop like flies. Big changes coming -- only the best will survive. SDRL is the best in class. Buying this stock under $15 is a no brainer.
Just pick up another load of SDRL. I can not see this stock getting much cheaper even if a barrel of oil is only $10. You and I both know that everyone is hurting at current prices, especially including OPEC countries. If the US makes a deal with Iran, OPEC will really suffer. If the US decides to export crude, OPEC will also feel great pain. Saudi Arabia is the only one holding OPEC back for cutting production. The pressure is mounting... if the Saudis don't relent, OPEC will crumble and be no more. The Saudis screwed themselves big time by trying to maintain market share instead of price. All they needed to do was cut production 0.5m barrels per day and everything would have been status quo. They have lost several hundred billion dollars on this stupid blunder and will lose billions more if they don't reverse their position. Behind the scene political deals need to be cut. The Saudis need to agree to cut production to prevent a settlement with Iran and hold off the repeal of the export ban on US Crude. US politicians obviously known this.
Something is in the wind... I guarantee it. A deal is coming soon.
Moreover, we hear all about Cushing OK tanks being 75% full, but we don't hear anything about all the new tanks installed in the field at the various oil plays. We are being bombarded with confusing news --- it feels like we are being conned out of our shares.
I would recommend anybody investing in the oil patch read "The Prize" a big book by Danial Yerkin.
Sell the farm; buy RIG: The prices is stupidly low. This day will be remember for decades. You can also load up on SDRL!
It stupid to think that producers will continue to pump crude when there is no place to store it. It's also dumb to sell RIG at any price less than $15 regardless of the price of crude. Even the shorts are stupid not to cover at these prices. SELL THE FARM AND BUY ALL YOU CAN.
SDRL... best buy at these numbers.
Think about this: It makes no sense for anyone to pump crude out of the ground when all the storage space is filled. If they continue to pump with no place to sell, they will be committing financial suicide. I think we will see production drop drastically in the new few weeks, long before the price drops much lower than it is now.
I also think that a big oil trader or two has some inside info on Congress approving crude exports.
We might even see an emergency OPEC meeting in which they agree to cut. OPEC does not want the US to lift the export ban on crude. If they do not cut production, the chances are 70/30 that Congress will allow crude exports. OPEC knowns this. I think they will back down and crude will bounce up $5. If not, Congress will approve exports and WTI will still bounce up $5. If this happens, we will catch 2-3 million shorts in a squeeze and SDRL could move up to $15-$16 share and maybe higher in a quick hurry.
I also think the selling Friday was way overdone.... now is the time to bet the farm!
Help me figure this out!
Thirty percent of RIG shares are still short (Link). This looks like a real stupid bet at this late stage in oil recovery. But maybe the shorts have a hedge?
Could one play RIG short by going long on one or two other offshore drillers? If bad news came for the sector, the bet would washout. On the other hand, if RIG got into financial trouble and crashed all be itself, while the others went up, the bet would pay off handsomely.
I have no idea but I believe the shorts must have a hedge somewhere, otherwise they would be out of RIG at this point.
In my opinion, small-time investors following the crowd by shorting RIG with no hedge are not too smart. They'd better reverse before they get wiped out.
Crude down ~1.5%. Drillers down ~2%. SDRL down ~4.2%. Stock being manipulated --someone trying to accumulated a large position at cheap prices. Just picked up 9,0000 more shares. Now is the time to buy all you can afford. SDRL bounce back to $11 before close.
Don't think you'll get SDRL much cheaper than it is now.
If you're looking for a lower priced stock with a great upside potential, take a look at Precision Drilling (PDS). This stock could easily triple in two years. It close yesterday at $5.92 and moves up and down in tune with the price of WTI.
As for SDRL, I see a nice pop this morning. The stock was down yesterday because a major holder that bought in at $10 wanted out in a hurry. SDRL has also been trading more on Brent prices then on WTI. On the other hand, RIG trades more on movement of WTI. I think this is due to the group of day-traders that work each stock.
I've been through two crashes (1998 and 2008). This one is the most difficult to sort out for me. Either I'm getting too old or something is missing from my calculations.
Can anyone explain this weird trading today
Amazing --- drillers mostly down ~4%; WTI up almost 4%
Why? I can only think of market manipulation.
Padrino, WTI is depressed now because the US market is oversupplied.
Even though they are losing money or bearing breaking even, production of tight oil continues at a high rate because many small companies have to keep up cash flow in order to pay bills. They can't wait until prices rise at the start on 2016. They will be flat broke by then.
Speculators are buying up the current over-production and storing it, hoping for a nice profit when WTI heads back into the 70s. The problem is that there is only enough storage space for another 30 million barrels and then WTI will crash.
On the other hand, Brent is traded on the International market. WTI and Brent are both sweet/light crudes; however, because supply is not running too far ahead of International demand, Brent is selling for $10+ higher than WTI. This shows you that the real oversupply problem is mainly in the US.
My advice would be to hold tight for 5-6 more weeks. Storage tanks will fill and WTI will plunge another $5 to $6 and drillers will get cheaper.
Take a look at Precision Drilling (PDS). If I had only $4,000 to gamble, I'd put it in PDS, use my margin to get $8,000 in stock. Be sure to set a stop loss at $5.25
Shale oil and gas production is not slowing because producers are operating on borrowed time. If they slow production, their cash flow will disappear and they will by facing foreclosure. In other words, they might as well sell all the oil they can before they go out of business. There is no tomorrow for hundreds of small producers.
I predict $44 WTI by the end of April. Brent will test $56.
SDRL will dip below $10. RIG will dip to $13
Shale oil and gas production is not slowing because producers are operating on borrowed time. If they slow production, their cash flow will disappear and they will by facing foreclosure. In other words, they might as well sell all the oil they can before they go out of business. There is no tomorrow for hundreds of small producers.
I predict $44 WTI by the end of April. Brent will test $56.
SDRL will dip below $10. RIG will dip to $13
SDRL never lost 1.4 billion dollars --- that's bullshit. They admitted that two drilling jobs worth a gross 1.4 billion were questionable. They are now negotiating with Petrobras to hold the deal together and to make sure they get paid. The profit margin after expenses on these two contracts was less than 15% (about $175 million). SDRL's TOTAL CONTRACTS for the coming year is over 20 billion so they lost %5 off the gross sales and there still is a good chance that the two years will be contracted by another production company. In other words, the announcement was simple SDRL be honest with investors. Really nothing to worry about. The stock was way oversold. If hold oils, SDRL will bounce back 5% to 7% on Monday when folks realize the stock has been punished far too much.
Looks like I was right when I called the drop in crude. My impression now is that we are headed even lower -- WTI will likely bottom in the low $40s.
I don't like the fact that the Saudis are selling light crude at a $2 to $3 discount in Asia. I even get the sense that the Saudis and OPEC are exceeding their quotas. Russia and Venezuela pumping like crazy. Lots of weird sh_t going on. It just feels like there's too much bumpy road ahead for offshore drillers.
I would even go short RIG but I'm not sure how the market will react when they cut the dividend, which they must do. The stock could bounce up $3 on the news or go the other way. The only thing I can do is keep my powder dry and let this thing play out.
Another downgrade with target of $12.
Transocean gives back a chunk of yesterday's big gain after Credit Suisse downgrades shares to Underperform from Neutral with a $12 price target, expecting RIG to stockpile rigs through 2016.The firm estimates 54% of RIG's 2014 revenue is "at risk" over the next two years mainly due to floater contract roll-offs, noting that RIG has 10 idle floaters and 11 more rolling off within H1.Credit Suisse also expects a dividend cut; while the firm thinks the prudent move would be to suspend the dividend, it could see a $0.40 annual dividend, which would yield $1B in cash flow savings.
read it here
Why you gonna believe?
The recent surge in oil prices is just a "head fake" and West Texas crude as cheap as $20/bbl may soon be on the way, warned Citigroup (NYSE:C), lowering its crude oil forecast again. Despite declines in spending that have helped oil prices rebound in recent weeks, U.S. oil production is still rising, Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia, said Edward Morse, Citi's global head of commodity research. Crude futures -1.5% to $52.07.
$20 oil coming -- Citi Bank
___________________________________________
The International Energy Agency (IEA) said in its monthly report that supplies remained abundant and that it would take time for investment cuts to make more than a relatively small dent on production, keeping prices low.
"Despite expectations of tightening balances by end-2015, downward market pressures may not have run their course just yet," said the IEA, which advises major industrialised countries on energy policy.
The agency said that, "barring any unforeseen disruption, ..
IEA says...
What an idiot!
I can't believe I messed the best up day for RIG. I guess it's time I hang up my stock trading keyboard.
The fat lady is still waiting to sing. This market defies common sense. I been buying and selling RIG for 20 years. Been through two other downturns like this one. Never seen crude prices go up at the same time inventories increase. It's always been the other way around. And, I've never seen so many shills both pumping and degrading the sector. Too much noise and not enough real information.
I also think a lot of the price increase in crude and in RIG is from shorts reversing themselves slowly; it's the only way I can explain it. Anyway, I'm on the side with a nice profit and intend to stay there until 2 plus 2 equals 4.
Watch Out For Falling Crude Prices:
Crude oil inventories grew again last week, putting more downward pressure on crude oil prices.
The U.S. Energy Information Administration reports that crude oil imports totaled 413.1 million barrels compared to 358.1 for the same period last year. That’s a 55 million barrel increase or 15 percent.
The oversupply of crude oil has caused the U.S. average price to decline from $97.49 per barrel to $48.24, according to EIA, which is a $49.25 decline, or 51 percent.
Petroleum economist Karr Ingham, who authors the Texas Petro Index, said last week that the oil and gas industry is in for a rough ride in 2015.
“There is every reason to believe the Texas Petro Index will lose 40 percent of its value, dropping to well below 200 from its peak of 312.9,” Ingham said.
“In the 2008-2009 contraction, the price decline was deep but short-lived and the TPI declined by nearly 35 percent. While it is possible the duration of price decline this time around could be short-lived as well, the fundamentals don’t quite suggest that will be the case,” he said.
Ingham said the industry could lose two-thirds of the drilling rigs from 906 down to 300 and about 50,000 jobs during this downturn.
“Over 130,000 jobs have been directly added to the upstream oil and gas industry in Texas over the course of the expansion now coming to an end (and we do not yet know for sure whether industry employment has peaked or not — but if it hasn’t, it’s about to),” he said. “Again, a realistic assessment suggests that we are going to lose at least 50,000 of those jobs over the course of this contraction, and frankly, that number could be higher.”
Ingham said that is the nature of the “falling dominoes.”
“Price first, and the resulting decline in production value, then drilling permits, rig count and ultimately employment with a lag time of a few months,” he said.
“The last domino to fall will be the actual volume of crude oil production. This is, of course, the signal being sent by the market to producers — to reduce production and do it ASAP. But it just doesn’t happen that quickly. New production still is being brought online as we speak and production will continue to grow for months into the future, perhaps even all through 2015. So the one occurrence that needs to happen the soonest will actually take the longest.”
Ingham said this decline is unlike the events of 2008-09.
“This is very much a supply-driven event, and it just looks like production will need to peak and then decline before much upside price support can be expected,” he said. “It’s not that we may not get some moderate relief from current low prices, but prices will need to rise fairly significantly in order to begin to turn things around, and we should prepare for the possibility that may not happen in 2015.”
RIG back to $16:
OPEC refused to cut production and crude dropped 52% since 2014.
I believe OPEC did this for two reasons: First, because it was necessary to help the world avoid financial collapse. Central bankers simply ran out of ammo... they could not drop interest rates any lower than 0.01% so there was nothing else they could do to stimulate the struggling economies.
I think the poor economy was the first motivation because dropping the price of crude so low was totally disconnected from the supply and demand picture. It's also bullshit to say the Saudis were worried about market share. They have the cheapest oil in the world and $billions$ in invest in drilling so who's gonna take away their market, especially in Asia and China?
The evidence is clear... the world is still awash in crude but the price is now headed north. This makes no sense whatsoever. Sure, the market might be betting on the future and the fact that the big producers have elected to cut CAPEX spending by huge amounts, but the truth be known, a pledge to cut CAPEX is like fart in a wind storm -- it can disappear in an instant. And, the US rig count can shoot up overnight.
The second reason OPEC refused to cut is the financial condition of heavenly leveraged small US producers. They borrowed a lot of money and sold a lot of bonds to go into the fracking business. To pay their debts, they have been selling their production forward on the futures market at ever increasing lower prices. Said differently, they are forced to sell cheaper and cheaper, ramp up production as much as possible, and cut expenses to the bone just to stay out of bankruptcy court. OPEC sees their position and also sees that fracking producers have turned the US into the world's #1 oil producer.
So... the two reasons OPEC decides not to cut production to cause the collapse of the US fracking industry and also boast a failing world economy. This two reasons have nothing to do with supply and demand. If it was a supply and demand issue, WTI would not be bouncing up -- it would be down around $40 barrel.
If crude prices continue to rise, the frackers hold on to their productions and OPEC gains nothing. I think crude prices need to remain low for the rest of 2015 or until the fracking producers go belly up.
But what's gonna happen to cause the oil market to return to normal? And, what happens if the majors hold the promised CAPEX cuts? It's like the Saudi oil minister warned a few weeks ago... crude could spike to $200 a barrel. But this might send the world into a major depression.
I see crude drifting back down with WTI holding about $44 and Brent holding under $48.
I see RIG back to $16 and SDRL back to $10 until June or July.
I've been wrong many times before so take this with a grain of salt.
Crude shot up too fast over the last 10 days! I expect a slow pull back next week. The Libyan scare was only one nutcase who shot 9 oil field workers; not an attack on any oil field. WTI inventories still at record highs. Lot's of crude stored in tankers around the world. Demand not increasing. World economies still struggling, even with 0.05% interest rates. OPEC supposedly holding production firm. US Production still high. Russia pumping like crazy. We are only GUESSING that production will fall in about 6 months. And, only PRAYING that demand will increase.
Moreover, the price of drillers tied directly to the price of crude with little consideration for the fundamentals in the world market. This is a pure sentiment play. Why should RIG trade on the price of WTI delivered at Oklahoma? RIG is international offshore driller and should trade more so on the price of Brent.
It seems that everyone is afraid they'll miss the big rally.
I would caution everyone in RIG to expect major volatility; don't panic if the stock pulls back to $16. Hang in and ride it out, but be prepared for at least a year's wait.
I say the sweet spot for WTI is under $50, and brent under $53 over the next 3 months. I also think the world NEEDS low prices until at least 2016 -- otherwise, we could face far more serious problems.
One more bit of advice... pick a strong gold mining stock and keep you eye of GOLD and SILVER.
I'm still long RIG but watching closely.
whisper number $53 not $35
STRONG UP SIGNAL FOR RIG, BUT NO ONE IS TALKING ABOUT IT! The volume of USO (a WTI ETF stock) was over 3 times high normal at 66 million shares with an 8% loss. Extremely high volume and sharp declines indicates panic selling, called CAPITULATION. This is when everyone who wanted to get out of USO (WTI ETF), for any reason (including margin calls), has sold out. The price should then reverse or bounce off the lows, which is EXACTLY what happened. Capitulation signals a bottom. Smart investors, who have been waiting on a strong bottom signal got what they were waiting on. They will now start nibbling in the oil patch. WTI will trade in the $48 to $50 range until the refinery strike is settled and then slowly ease up to $51 - $53 until May or June and then higher to $56 - $59 range. We'll see $70 by December 2015.
All the negative BS is like a fart in a wind storm so pay no attention to the so called stock advisors. Also use caution when following technical analysis. Using technicals is like driving forward while looking in your rear view mirror.
BRENT will trade around $54 until WTI moves up to $51 and then both will slowly ease upward.
I say RIG will hit $20 by the end of April.
WTI has put in its bottom at $48. Spread between Brent and WTI is way out of line. USO volume over 60 million shares(normal about 23 million. WTI dropped over 8% and is way oversold. These are all signs that WTI has put in its bottom.
It will be up from $48.00 barrel.
WTI under a lot of selling pressure but I still believe RIG will rally 30 minutes before the close. I also expect some shorts to clear causing a sizeable increase in volume.
It's strange that the shorts aren't clearing on the downturn. Most must have some type of arbitrage deal where they are betting on both ends of the trade. Don't understand arbitrige but I bet its going to hurt them in the end.
Crude inventory up 6.1 million barrels. Oil refineries shut down as strike continues into its 3rd day. This could boast inventories sky high and may cause brent crude to drop back below $50 barrel.
This might also present a buying oportunity unless the shorts try to reverse. Interesting indeed....
shorts not clearing just yet... they must be waiting for crude oil inventory numbers coming out tommorrow.
RIG will pull back if inventories are too high.
Also watch out for a strike at 200 refineries (64% of fuel production in the US). The strike could cause inventories to hit all time high and more.
Keep lots of dry powder; this could present a super buying oportunity. On the other hand, this might be the pull back that the shorts are waiting on.
Interesting times indeed.
break breaks $53 -- WTI breaks $48
RIG shorts need 7 days to clear... don't seel, hang on... here we go up, up, and away!
can anyone say sort squeeze
Brwent breaks $52 -- WTI threatens $48
Brent breaks $51 - WTI theatens to break $47
Brent breaks $50 barrel; WTI threatening to break $46 barrel. I don't understand how oilcan bounce up and all the advice is that were headed to $30. Someone's wrong.
RIG being drug down by daytraders and shorts. Time to load up.
Offshore Atlantic Drilling will benifit RIG.
http://seekingalpha.com/article/2858356-seadrill-and-transocean-potential-beneficiaries-of-proposal-to-open-southeast-atlantic-to-drilling
Large Inflow of Money into RIG Shares
Transocean LTD (NYSE:RIG) dropped -3% or -0.51 points to trade at $16.47 per share. As per the latest trading data available, the net money flow stood at $4.67 million as the counter received $12.13 million in upticks and gave away $7.45 million in downticks. The final up/down ratio was at 1.63, which is a very positive sign and conveys that long positions are being made. On a weekly basis, the stock has appreciated by 5.11%.During the course of the session, the counter witnessed a block trade with an up/down ratio of 26.92. $5.37 million was the inflow in upticks and $0.2 million was the outflow in downticks. For the block trade, the net money flow was $5.17 million.
http://www.rockhilldaily.com/large-inflow-of-money-witnessed-in-transocean-ltd-shares/321647/
RIG presents great buying opportunity: I'm in for another 2,000 shares at $16.
USO up 20 cents. OIL up 17 Cents. Brent up 65 cents. WTI up 39 cents. SDRL up 01 cents. RIG down 59 cents.
These numbers make no sense at all. The only way to read this is as the beginning of strong accumulation.
Watch RIG bounce back strong later in the day.
Obama Open to Offshore Atlantic Exploration: Drillers Delighted
http://finance.yahoo.com/news/obama-open-offshore-atlantic-exploration-224510510.html