Sell GulfMark (GLF)
I’m going to take my own advice (see my post http://jubakpicks.com/2010/03/09/stocks-show-signs-today-of-having-more-fuel-in-the-tank/ ) and use this rally to sell GulfMark. I think fundamentals in the oil industry have turned, if not against, at least away from this provider of offshore service vessels to drilling operations. Read more
Update GulfMark Offshore (GLF)
Lots happening at GulfMark Offshore (GLF) over the last quarter. Much of it good. But nothing that yet indicates the decisive turn in the company’s business that I’ve been looking for. The best I can say is that it feels closer.
First, at the end of October the company announced a restructuring, scheduled for completion in the first quarter of 2010, that would merge the existing GulfMark Offshore with a wholly owned subsidiary New GulfMark Offshore, in order to limit the percentage of stock owned or controlled by non-U.S. citizens to a maximum of 22%. This is intended to preserve the company’s status as a U.S. citizen under the Jones Act, which governs maritime activity in U.S. ports. I’m sure this has engendered confusion and probably some selling but the reorganization is a neutral event (other than for the confusion that led to selling) for most investors since each common share of the existing company will be converted into one share of New GulfMark Class A stock. The new stock will be governed by the ownership provisions of the Jones Act.
Second, on December 17 GulfMark Offshore announced that it had arranged a new $200 million term-loan facility to replace the prior loan facility of $220.6 million. Read more
Buy GulfMark Offshore (GLF)
Suddenly they’re hitting gushers from the Gulf of Mexico to the South Atlantic off Brazil to the west coast of Africa off Ghana and Sierra Leone.
The oil from these finds will eventually become critical to global supply—once the global economic downturn is over. The downturn has brought us what the International Energy Agency projects will be a two year slump in demand. If the global economy recovers relatively quickly, the agency projects, we could be facing another supply squeeze by 2014.
But these finds themselves look like their end another oil industry slump well before that. Deep water exploration suddenly seems to be headed to a boom. And that means we’re likely to see rigs coming out of cold stacking and starting to earn day fees again well before 2011, the year that many analysts had picked for a turn in the drilling industry.
In other words, the way to play these big deep water discoveries now is by buying shares in the drilling companies most likely to profit from an earlier turn in the sector’s fortunes. Read more
