August 4, 2021
From
Transocean (RIG) Q2 2021 Earnings Call Transcript
These data points firmly corroborate our belief that we are in the beginning of an up cycle in the offshore drilling industry. As the world continues to rebound from the global pandemic, the need for hydrocarbons is increasing, which in turn dictates that more exploration and production is needed. Looking forward, we are encouraged by the relative stability in oil prices. They've remained well above $60 per barrel since early February and more recently above $70 per barrel.
And as a result of the recent production agreement between OPEC and its allies, we expect this new pricing floor to be highly constructive and attractive for future investment from our customers. As the COVID-19 vaccines are distributed around the world, we expect that global demand for hydrocarbons will continue to recover. However, we are pragmatic, the timing of the global recovery may be a bit more fluid given the COVID variants that are circulating. Yet we've already witnessed as COVID cases diminish, economic activity returns, and so does the need for hydrocarbons.
Most importantly, we believe our customers also share our view. Their confidence in improving oil market fundamentals has resulted in accelerated planning for new or previously sideline projects, many of which are expected to commence later this year or early next year. Taking a closer look around the global market. Starting in the U.S. Gulf of Mexico, we continue to see an extremely tight market with only one available asset as we enter 2022, and the very real possibility that this market could be entirely sold out of active and marketable rigs by year-end. Several of our recent pictures for our seventh gen assets are now near or above $300,000 a day, reflecting the improving market and the obvious scarcity of active high-specification assets. We expect this trend to continue through 2022 with relatively few assets available in the region. It's worth noting that we are not only responding to more tenders, we are also engaging in far more direct negotiations, particularly with customers operating in the Gulf of Mexico.
Actionable Items
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