Transocean Ltd. (RIG)

[ogbull]

With peak oil production at least 50 years into the future, for OPEC to run up crude to $120 was a suicidal mistake. This high prices sparked new energy technologies needed to reduce demand and extract more oil from depleaded wells (fracking).

OPEC's sweet price for crude is just below the production cost of fracking, which is projected to be $50 barrel--maybe $60 in ten years. In other words, crude is very near its bottom and OPEC will cut production to hold prices. This price also keeps Russian oil off the market.

On the other hand, deep water drilling for mega oil and gas deposits is highly profitable even at $40 barrel. Production companies that want to stay in the game will be forced to drill for big deposits in deep water.

Natural gas is the fuel of the next century. Its low carbon content relative to other fossil fuels will play a significant
role in reducing carbon dioxide (CO2) emissions, acting as a “bridge” to solar power and a low-carbon future.

The majors know this and will be drilling in deep water looking for major gas discoveries. Huge marine platforms will anchor above these fields and process natural gas and turn it into a liquid. LNG tankers will pull along these platforms and load the LNG and take it to markets all around the world. No need to build expensive pipes and shipping ports.

Said differently, it's a big mistake for RIG stock price to tract the price of crude. Deep water drilling for natural gas is RIG's future. That's why I don't care what happens to crude prices. I'm long RIG and plan to stay that way.