Look Offshore for Real Value
I've been watching the late-spring market swoon through the prism of oil prices. Recently, I have written that oil price action, as bad as it's been, has been telling me to slowly start coming out of cash and into energy stocks. But where exactly? One place to look for some real value is with the offshore drilling companies.
From a very wide, macro view, offshore drilling represents a great place to start re-entering the energy trade because offshore profitability is almost entirely based on crude oil pricing (despite yielding plenty of natural gas). I have been convinced that crude oil prices will inevitably find a bottom in 2012 that is well above the prices we saw in 2011 -- well above $100 a barrel in global average price. This will make the most challenging of offshore operations, using the deep and ultra deep water rigs owned and leased by companies like SeaDrill (SDRL), Transocean (RIG), Ensco (ESV) and Rowan (RDC), increasingly profitable moving through 2012 and into 2013....278 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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