Thursday, May 8, 2008

Jefferies Source Of Petrobras Rumors

A Bit of Upside for Deepwater Rigs

Companies Featured in This Article: Petrobras, FMC Technologies, Cameron International, Dril-Quip, Oceaneering International, Hornbeck Offshore Services, GulfMark Offshore, Tidewater, National Oilwell Varco, Repsol YPF, Hess, Transocean, Diamond Offshore

Jefferies & Co.

UNDERSCORING OUR POSITIVE ultra-deepwater thesis, a huge series of ultra-deepwater-rig awards is likely forthcoming from Petrobras, Brazil's National Oil Company (NOC), which will have positive ramifications for the deepwater-rig segment but more directly impact deepwater-service companies.

Our industry sources indicate that Petrobras is likely to announce letters of intent (LOI) to award long-term contracts for as many as 17 new-build ultra-deepwater rigs by the end of the week.

In what would be an unprecedented contract award for size, we understand that Petrobas could award LOIs (with underlying contracts of six ...
This explains why NOV was up 9% today.

Since I'm last to know and it was too late to buy NOV, I saw PBR down on the split and bought at $62.75 for a point.

It's better to be lucky than good =)

UPDATE: U.S. March Trade Deficit Narrowed More Than Forecast

Brazil is preparing to tap the biggest crude-oil discovery in the Western Hemisphere in three decades, which lies just off its Atlantic coast. Petroleo Brasileiro SA, Brazil's state oil company, is in talks with Houston-based Transocean Inc. to extend offshore drilling contracts.


Anaconda said...


This post and the Barron's business note point out in ringing tones that investment in deepwater, deep-drilling is not limited to Transocean.

Multiple companies are rushing to build up the fleet of ultra-deep drill ships. And why not, the price signals from the market are strong (oil bid at $126 a barrel), and the recent deepwater discoveries off the Southeastern coast of Brazil, present a picture of huge oil reservoirs in deepwater waiting to be discovered and exploited.

This was preceded by the technical, financial, and geological effort that went into developing deepwater, deep-drilling in the Gulf of Mexico. As big and risky as the Gulf effort was, it now looks like only a preliminary stage in the maturation process of the deepwater sector of the oil industry.

What was learned?

It's technically feasible and there is oil to be brought to market. And, it's the sector of the oil industry with the greatest growth and least political drag (other than the U.S., excluding the Gulf).

A high tech gold rush is underway.

Reviewing the professional literature, reveals that the geological structures that have so far relinquished the Brazilian oil finds is present and repeated just beyond the continental shelf all over the world.

The pattern is deepwater, turbitity sediments, and thick layers of salt with huge oil deposits beneath.

(Of course, this also means all areas within the continental shelfs of the world are reachable.)

Yes, technical challenges remain; high hurdles that must be overcome, but the brightest minds are putting their shoulders to the wheel.

This sector-wide investment stampede signals that the people in the know are confident those challenges will be overcome.

Spin the globe: Oil exploration in deepwater is full speed ahead!

Anaconda said...


Houston, Texas, May 5-8, 2008

The attendance reached over 75,000 for the four day conference. In 2007 attendance was over 67,000 which was a 13% increase over 2006.

The conference and exhibition hosted 2,400 companies from 30 countries.

Clearly the word is out on the street, "Offshore, it's the place to be."

Yes... Yes, it is!

People the world over are coming to this conference to share ideas, form relationships, and cut business deals.

These people are most familiar with offshore drilling, these are the people that could benefit most from having a better understanding of the best currently available science concerning the origin of crude oil.

And as has been stated in this space before: Abiotic oil theory is the best currently available science.

True, a good number of them would be sceptical of abiotic oil, if not downright hostile, but while it maybe easier to persuade people with an open-mind, ultimately the key to getting the theory accepted is to win over the sceptics, even if it's one at a time.

Of course, persuading a few opinion leaders in the industry would help temendously.

The hard science supporting abiotic oil has been confirmed by empirical evidence in the field and demonstrated in the laboratory.

People that respect the scientific method can be persuaded.

But like any good promoter, one has to come up with an openning pitch that gets people's attention and holds their interest.

With the "gold rush" atmosphere, and the Brazilian oil finds that break all the traditional notions of "fossil" theory, that opportunity has arrived.

When people first called it rockoil or mineral oil, they didn't know how right they were.

Anaconda said...


Oil & Gas Journal,
Indonesia Ponders leaving OPEC,
Eric Watkins, Senior Correspondent,
Los Angeles, CA
May 8, 2008

Indonesia announced that at a cabinet meeting of the government, the agenda included discussions of whether to leave OPEC.

Principally, the issue was the expenses associated with being a member of OPEC. Indonesia has been a member since 1962, and is the only member from Southeast Asia.

This expense was said to be more burdensome because indonesia's oil production has declined, it's the only OPEC country that is a net importer of oil.

But here's the scoop. Could it be that indonesia is simply tired of the politics surrounding OPEC, and is concerned that has contributed to their falling oil production?

That's not something the government is going to come out and say publically.

OPEC's quotas may have driven up the price, but it has also restricted production which likely has caused additional exploration and development to wane in Indonesia and other member states as well.

Indonesia straddles an arc rich in oil producing geological formations, cited by Thomas Gold, the abiotic oil theorist, as an example of oil geology following the tectonic plates of the earth.

The OPEC strategy of limited production, is starting to see its facade crumble, as deepwater,deep-drilling is threatening to take market share in the near future.

Indonesia has many opportunities for deepwater, deep-drilling, and maybe it's receiving whispered advice that Indonesia has more to gain from being independent from OPEC's onerous bureaucratic machinery.

Undoubtedly, Indonesia, like many other countries, has robbed the oil piggy bank to float their government's budget, leaving little capital for new exploration.

Abiotic oil principles applied in deep water, deep-drilling, and on land, in established oil fields, can increase Indonesia's oil production to become an important oil exporter once again.

Indonesia just might be ripe for Western investment and expertise.

How many other countries are close behind indonesia's example?

Anaconda said...


Certainly, it's good to see the trade deficit come down, as this writer sees the combination of trade deficits and federal government budget deficits is behind the falling Dollar, which is partly responsible for increased world oil prices. (The other considerations are increased demand in China and India, among others, and increased exploration costs.)

But these numbers seem to be more influenced by the economic slowdown as opposed to surging world demand for American exports: Although, near a record, exports dropped 1.7%.

The oil industry is an important part of the U.S. economic picture, both on the import and export sides of the ledger. U.S. corporations like Transocean are at the cutting edge of overseas earnings in the growth sector of deepwater, deep-drilling oil exploration and development. This sector of the oil industry can deliver increased oil production to the world market, contributing to a stabilization of prices; and should domestic U.S. politics get out of the way of oil exploration in the U.S. and it's offshore waters, deewater exploration can contribute to less reliance on foreign oil imports.

Caveat: America will continue to import oil from foreign countries, even with a rational petroleum exploration and development policy. But America will be in a better position to influence events, rather than be held hostage to the actions of others.

Some maintain trade deficits are irrelevant, but it's part of the larger structural fundamentals, which determine the economic health of America and it's continued sovereign independence.

A sound petroleum exploration and development policy and a strong oil industry to execute that policy, are critical to America's future economic strength.

Oil is the most economically productive substance on Earth.