Watch Lists

[dan_s]

All of our Watch Lists (E&P, Drillers and MLPs) have been updated and posted to the website.

[bearcatbob]

Do you disagree with the RJ forecast of fewer rigs or do you attribute increased earnings to some other aspect of their businesses?

Bob

[dan_s]

I just think it is a bit premature to expect a decline in drilling anytime soon, even if the oil price does pull back a bit. E&P companies built their capital budgets last October/November. None of them assumed $100/bbl oil. Higher commodity prices than were used in the budgets only expand spending budgets.

The main problem I have with RJ is that they are using short term drop in oil demand (primarily the result of a very warm North American winter) and making some long-range forecasts based on it.

Also, the EPS and CFPS numbers on our Watch Lists are provided by First Call.

Note that 14 of the 15 drillers on our Watch List are expected to report higher EPS this year. Diamond Offshore (DO) is the loan exception and they are still going to have a strong year. Some are expected to report very significant increases in earnings, yet their share prices are down.

HP earnings per share are going from $3.90/share last year to over $5.00/share this year and the share price is down YTD. HP Flex Rigs are in very high demand and it will take a prolonged decline in oil prices to change that.

[bearcatbob]

Thanks Dan.