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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 1155  
Subject: Re: Downgrade Date: 4/21/2009 3:50 PM
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I think you are right about RIG dominating the deepwater drilling market and that this is where the action will be in the future.

The big question: how far into the future?

I don't think anyone knows. It might not be too long if the recession doesn't hit Asia too deeply for too long. If demand keeps growing over there, oil prices will likely remain high enough to support deepwater projects.

However, if the recession is deep and long, it could be a decade before this whole story plays out. I doubt it will be that long, but it could easily be 3-4 years before demand starts to push oil prices upwards again. After all OPEC is now sitting on like 4 million bpd of spare capacity. That accounts for a good 2-3 years of global demand growth, assuming growth rates go back to where they were before the crash.

So, I like RIG, I like their business, I'm holding the stock, but I'm expecting it will be a long time before the thesis plays out.
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