Koil Energy Solutions Inc. (KLNG)

[nature boy]

Recs: Wall Street Journal

Recs: Wall Street Journal...
Oil's Fall Won't Scare Deepwater Drillers
Oil prices are ever closer to the sub-$100 level, and that has energy-company share prices flaming out these days.

But weak share prices for the deepwater-drilling companies could be short-lived. Despite current slowdowns, long-term demand for oil will grow alongside emerging economies. Firms like Transocean, Diamond Offshore, Ensco International and others will benefit.

Deepwater-exploration companies -- the oil producers that need to lease drilling rigs -- aren't deterred by today's falling prices. They are locked into extremely expensive long-term contracts, and they can't walk away from their huge investments in deepwater energy.

Producers were locking in contracts to lease deepwater rigs for between $400,000 and $600,000 a day when oil prices were cheaper than they are now. New rigs soon to arrive are expected to fetch as much as $1 million a day. Some energy-patch investors say oil could fall to $60 before deepwater producers would consider pausing.

As such, rig demand remains strong and supply is tight. Brazil's Petrobras, for instance, recently snapped up leases for the bulk of the world's deepest-drilling rigs.

Says Matt Simmons, who heads Simmons & Co. International, an energy-centric investment bank: "There is an extremely bullish, long-term case for the [deepwater] drillers. They are far more immune to short-term swings in oil prices, and their earnings power is just unbelievably vast."

--Jeff D. Opdyke