I’m filing this update from the beach. I’m on vacation the week of March 29 to April 2. Unless the sun stops shining here in the Bahamas (or the kids decide to hire themselves out on a fishing boat), I don’t anticipate filing more than once a day for this week. JubakPicks.com will go back to its normal schedule on Monday April 5.
Update Transocean (RIG)
Shares of Transocean (RIG) were up 3.8% as of 2:00 p.m. ET today, March 31, on news that President Barack Obama has proposed permitting exploration in the Atlantic Ocean from Delaware to Florida and in the Gulf of Mexico 125 miles off the west coast of Florida if Congress lifts its moratorium on drilling in the area.
Very little is expected to happen very quickly. An area 50 miles off the coast of Virginia would be opened up for immediate exploration. Further south areas would be opened for study with a decision on drilling pushed off into 2013.
And all this is just a proposal by the Obama administration anyway.
But even if this is all just words now, they’re important words.
 To permit or not to permit drilling in this area and other off-shore locations has been one of the sticking points in any effort to draft a national energy policy. This proposal from the administration is an effort to get that legislation moving by throwing the administration’s support behind a potential compromise. (At the same time as President Obama proposed allowing drilling in this area, he reversed as Bush administration decision to allow drilling in the Bristol Bay region of Alaska.)
I don’t see any reason to change my current target price on Transocean of $105 by November on this news. But the proposal is important in the long-run for the big multinational oil companies—and the drilling and service companies that they support with their capital spending. These companies have been increasingly locked out of the world’s most promising geologies for oil exploration by governments that favor their national oil companies. (For more on the problems this poses for Western oil companies see my post https://jubakpicks.com/2010/03/09/oil-drilling-failure-rate-plunges-at-the-western-majors/ )   Â
The major international oil companies have plenty of money for exploration and development but relatively few places to put it to use. And while the United States faces a glut of domestically produced natural gas, U.S. oil production continues to fall behind demand and one of our most politically reliable suppliers of foreign oil, Mexico, is facing its own production crisis.
I think you can bet, given that context, that if the United States opens these areas to drilling, the oil companies will come. And that would be especially positive for drilling companies such as Transocean that specialize in mid-depth and deep-water drilling.
Full disclosure: I own shares of Transocean in my personal portfolio.
Forget the politics,, drilling off the coastal united states will generate cash and JOBS and push drilling stocks higher so we can make money. It would do wonders for the economy. Just think if California would start drilling off its coast? It might be able to dig its way out of its hole. So yeah, drill baby, drill!!
huhhh????
Oh, dear…poor Sarah.
obama, is just trying to steel the thunder away from the repulicans with this fake drilling drill baby drill issue. trying to appease the public after obama care got shoved down our throates. lead the sheep away from the truth. notice how he is paying alaska back (Sarah Palin) by denying drilling there!
Speaking of green energy, why is the sector selling off so hard. MXWL keeps taking a licking. I own shares of MXWL and I’m going down with the ship so far. Does anyone have a good theory why the green sector is selling off?
Politicians are the world’s biggest liars. They will say anything for a sound bite. The dominant powers in Washington, and their supporters, have been demanding clean alternative energy generation for years. And yet, they are also the first groups to mount lawsuits against any company that attempts to actually construct something. Where are the wind farms? Where are the massive solar arrays out in the deserts? Why haven’t the rail companies been allowed to upgrade their facilities connecting America’s ports? It is all feel good rhetoric mixed with crumbs for public consumption.
This a start of a long debate. We need an energy program and we have to start somewhere.
I view this as Obama’s way to lure the Reps into something the country needs and they agree and they actually have ideas for a solution.
We all realize that no oil will come out of the ground for several, maybe up to ten, years.
We, at least, have a place to start now.
The reaction to the offshore drilling announcement is overdone. I view this announcement as “window dressing”, just show the public that he is trying to produce more oil, thus lower the gas price at time average national gas price went up more than $1 from year ago. With environmentalists as one of his biggest supporters (anouther is union) and donors, don’t expect anything significant.
@Shameus, I agree that this helps lay the political foundation for greener energy policies. However, I doubt the administration will undertake that political fight before the mid-term elections. They will probably choose a legislative initiative that offers more hope for a popular consensus – like financial reform.
@ Shameus – I agree. This is just a bone for the “drill, baby drill” buffoons in Congress. Fox News is about to break the news: “there are no more Dinosaurs dying” “what’s under ground is all we have”. And about those “reserves” the experts claim they have, these are numbers they are pulling off their rear ends. By the time a drop of the stuff comes out of the coast of Virginia in a few years, China and India will be sucking up every barrel the planet produces at a rate unmatched in history. And that’s what makes certain drilling players good prospects for the next 5 years or so.
This is all a ploy by Obama and a smokescreen. The end result will be nothing better in this regard, only worse.
Seems to me also that this move by Obama, along with the move to support Nuclear a month ago, is an attempt to move an energy bill forward. Should he prove as deft a politician as he was with healthcare in the longterm, I suspect this should help MXWL, Ormat, STP, and others, no? Do others here think that this bodes well for what pundits have being calling impossible–the passage of an energy bill before the elections? Many Republicans have recognized that Global warming is real, and that weaning ourselves from foreign oil with domestic wind, solar, nuclear, is a national security issue–Lindsey Graham for instance, even, Bush did in his last year. Any thoughts on the prospect of an energy bill?
Do you think we should re buy GulfMark Offshore????? this is a cheap stock
enjoy the bahamas.