Message Font: Serif | Sans-Serif
No. of Recommendations: 1
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.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.