![]() ![]() In the UK a new Prime Minister, Liz Truss, has just been elected who plans to push for new rounds of petroleum development in the British sector of the North Sea. People, businesses, and countries will do whatever they have to do to get the electricity they need,” I’ve also stated it as “when forced to choose between dirty electricity and no electricity, people will choose dirty electricity every time." This notion has come into conflict with the Iron Law of Electricity, which as codified by Robert Bryce in a Forbes article, states simply. Green energy was supposed to be cheap and limitless, it was after all. In recent times, perhaps fearing just such an outcome, the former head of state of Sri Lanka sought friendlier climes in Singapore. The old expression, "Heads will roll," was likely coined at just such a pre-protest meeting of an irate body politic. Historically, in times of extreme social unrest, "the heads" of the heads of state, occasionally became detached and rolled down the steps of capitol buildings. Across the continent, people are upset at the prices they are being charged for energy - very upset as it turns out - and are turning out in public spaces shaking their fists, carrying placards, and exhorting their politicians to lower energy costs.Ĭitizen behavior like this tends to make heads of state nervous. The soundness and pace of implementation of the " Energy Transition" are being re-thought. The macro thesis for offshore drilling: The Iron Law of Electricity We think the company is attractive to investors willing to accept the substantial, but significantly lessened risks that remain for RIG. The Deepwater Titan will begin its Anchor contract in 2023 and continue until mid-2028.Īnalysts are mildly bullish on RIG, with a Hold rating, and price targets up to $7.00. The Deepwater Atlas will arrive in the GoM-Q-4, and begin its contract with Beacon Offshore in late 2022. Rescheduling the maturity of the Revolving Credit Facility-RCF to 2025, keeps liquidity at ~$2.5 bn through a critical period. Increased activity, length of new contracts, and substantially increased day rates bode well for RIG. Idle time usually occurs when the rig breaks down and day rate charges are suspended. For the full year in 2022, RIG projects contract revenue of $2.6 bn, a decline YoY of ~$100 mm due to idle time on the Deepwater Asgard. Additionally they added a critical $1.2 bn to their contract backlog, pushing it back above $7 bn. RIG grew revenues 16%, increased fleet utilization to 58.2%, and beat analyst estimates for EBITDA in Q-2, 2022. Last week I added at $3.51, doubling my stake. RIG's stock has fallen 40% from the recent $5.00 high, and I opened a position in the low $3s. StockPlanets/E+ via Getty Images IntroductionĪ review of the recent analyst call for Transocean ( NYSE: RIG) contains some favorable signs that should boost shares of the stock as we close out the year.
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