Drilling: Simple Facts
1) Oil rich nations, companies and drillers are all using a benchmark of $60 to $70 a barrel of oil to make investment decisions.
2) There isn't a single deepwater rig available - even if you wanted one, you can't get one.
3) Few drillers are building on spec, though some are, like Pride. Pay before you play, is pretty much the name of the game - a conservative strategy that will keep costs in line for most drillers.
4) Estimates are through the roof and will continue to be for some time.
5) Those that own the drillers need to be prepared for the big slam when oil finally gets pummelled to $90 a barrel. It'll be a great opportunity.
6) This will end. Not today, not in 2009, and realistically, in my opinion, not until 2012, but it will end -- keep an exit strategy in mind. Its possible (however unlikely) that production soars and demand drops.
7) The U.S. will take action against Iran - further inflating the price of oil.
8) Recent rate cuts by the fed will continue to inflate the price of commodities - drillers follow the price of oil. Like it or not, its true and works the other way as well.
Any other facts out there you'd like to share?