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Author: saunafool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1158  
Subject: Re: Cramer: Transocean Faces Tough Sailing Date: 12/5/2008 6:49 AM
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Cramer has to say something about every company in the universe. The hedge fund story sounds plausible, but is just doesn't appear to hold any water.

Strange, all you have to do is look at the fleet update and you can see the contracts are with BP, StatiolHydro, ExxonMobil, Reliance, Chevron, and other big oil companies.

Also, going through their quarterly report, dayrates and utilization through the 3rd quarter were still very strong. I guess the fear is that oil prices will continue falling and contracts will be canceled (if possible), or at a minimum, new contracts will have dayrates back at 2004 levels ($250,000/day instead of $500,000/day).

For me, I'm planning to hold RIG for many years. The big problem right now is that oil demand is falling due to the weak economy. Yet, the big new oil reserves continue to be found offshore, not on land. Chevron, BP, Shell, ExxonMobil all need to replace their reserves. Where are they going to do it? Most likely in the deepwater GOM, offshore Angola, or other deepwater drilling locations.

So, barring global financial collapse and a 10% reduction in demand worldwide, I would expect we have a rough patch for a few years until the recession works itself out. After that, assuming the world has not come to an end, RIG should do very well indeed.
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