Tuesday, November 28, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use
Oil Market News
  • Home
  • Marketdaily
  • Price
  • crudenow
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEChot
  • brend
  • ships
Oil Market News
Home investing

Why Offshore Drilling Stocks Are Sinking Again

2 years ago
in investing
Why Offshore Drilling Stocks Are Sinking Again
Share on FacebookShare on Twitter


What happened

The offshore drilling industry continues to take an absolute beating. On May 13, shares that make up nearly the entire sector fell by double digits on a combination of bad news on the oil inventory front, and a speech from U.S. Federal Reserve chairman Jerome Powell that spooked the entire stock market.

As of 1:16 p.m. EDT, shares of Valaris PLC (NYSE:VAL), Noble Corp. (NYSE:NE), Borr Drilling (NYSE:BORR), and Transocean (NYSE:RIG) were all down between 9% and 15%. Shares of Seadrill (NYSE:SDRL) were also down 4% at this writing, having recovered a bit after trading down more than 8% earlier in the day.

Offshore drilling rigs lit up at dusk

Image source: Getty Images.

So what

Powell’s speech played a big role in today’s sell-off for the broader market that’s compounded things for these oil drillers. In the speech, Powell highlighted the uncertain state of a U.S. economy that has fallen deeply — and quickly — into recession. In particular, Powell pointed out that it would likely require more drastic intervention by the government to soften the economic blow of what is essentially a forced recession, caused by steps to limit the spread of the deadly coronavirus that causes COVID-19.

Latest Oil News

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

February 1, 2023
Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy investing poised to top money backing oil and gas after hitting a record

January 31, 2023
Crude Oil Shielded From Bond and Stock Market Rout

The Cushing® MLP & Infrastructure Total Return Fund Announces Fund Name Change

January 30, 2023
Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

January 29, 2023

To sum up the market’s reaction, today’s big sell-off has the SPDR S&P 500 ETF Trust (NYSEMKT:SPY) down 1.8% in the afternoon on fears that the expected economic recovery may not be as certain — or as quick — as many hoped.

In addition to the worrying economic news, both the U.S. Energy Information Administration and the American Petroleum Institute poured more oil on the market’s rally. Today and yesterday, the two organizations reported weekly petroleum inventory data that showed the U.S. is still awash in a massive oversupply of oil. At the same time, global oil production continues to exceed demand, and oil stored in container ships, commercial on-land storage facilities, and in pipelines is at record levels.

Now what

The blunt and frightening truth is: We could see every single major offshore oil drilling company go bankrupt this year. We’ve already seen Diamond Offshore file for bankruptcy, and it’s almost a certainty that more will follow in the near future.

Oil producers are slashing spending. Offshore oil is one of the most expensive resources to develop, and also the one that takes the longest to bring to market. In the current environment, that’s a recipe for disaster for offshore oil stocks, considering that the industry never really recovered from the 2015-2016 oil crash, and had only started showing signs of life in the past 18 months.

As a result, investors have been absolutely devastated:

RIG Chart

RIG data by YCharts.

At recent prices, most offshore drilling stocks trade for about $0.50 or less, with only Transocean, at $1.44 per share at recent prices, much over $1. If that doesn’t tell you just how ugly things are offshore right now, I don’t know what will. Over the rest of 2020, we may see the entire sector go through bankruptcy proceedings to reorganize, and get their balance sheets more in line with the cash-generating capabilities of their operating assets. Even Transocean and Seadrill, with more than $1 billion in cash on their balance sheets, are facing massive amounts of debt maturities in the next two years that they may not be able to refinance.

Investors in the offshore drilling sector have already lost nearly everything over the past few years. Now is not the time to fish offshore on the hopes of catching value. In a few months, I expect that lenders will be the only ones recouping much of anything, as the entire sector hits the “reset” button on their capital structures.





www.fool.com

Tags: drillingOffshoreSinkingStocks
Previous Post

Oil Is Unlikely To Go Much Higher

Next Post

Asia-Pacific stocks mixed; China announces new anti-monopoly rules

Related Posts

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

by Oil Market News
February 1, 2023
0

Orbital Sidekick hyperspectral imagery. Photo: Orbital Sidekick Orbital Sidekick announced a $10 million investment on Tuesday to support growing its...

Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy investing poised to top money backing oil and gas after hitting a record

by Oil Market News
January 31, 2023
0

By Rachel Koning Beals 'Investment in clean-energy technologies is on the brink of overtaking fossil-fuel investments, and won't look back,'...

Crude Oil Shielded From Bond and Stock Market Rout

The Cushing® MLP & Infrastructure Total Return Fund Announces Fund Name Change

by Oil Market News
January 30, 2023
0

DALLAS, Jan. 30, 2023 /PRNewswire/ -- The Cushing® MLP & Infrastructure Total Return Fund (NYSE: SRV) (the "Fund") today announced...

Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

by Oil Market News
January 29, 2023
0

6/6 © Reuters. FILE PHOTO: Relief supplies of the "Humanitarian Help of Switzerland" are loaded onto a Boeing 747-400BCF cargo...

Chevron’s Profits Fall Short. Is This Top Warren Buffett Stock in Trouble?

Chevron’s Profits Fall Short. Is This Top Warren Buffett Stock in Trouble?

by Oil Market News
January 28, 2023
0

Chevron (CVX -4.44%) finished 2022 with a bit of a whimper. While the oil giant's profits rose compared to the prior...

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

by Oil Market News
January 27, 2023
0

© Reuters. FILE PHOTO: United Arab Emirates' Industry Minister Sultan Ahmed Al Jaber speaks during the Abu Dhabi International Petroleum...

Next Post
Asia-Pacific stocks mixed; China announces new anti-monopoly rules

Asia-Pacific stocks mixed; China announces new anti-monopoly rules

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments

Trend Oil News

Should Oil & Gas E&P Stock California Resources Corp (CRC) Be in Your Portfolio

Should Oil & Gas E&P Stock California Resources Corp (CRC) Be in Your Portfolio

1 year ago
Oil industry’s dash for gas comes with risks

Oil industry’s dash for gas comes with risks

2 years ago
Oil Under Pressure As API Reports Large Crude, Product Builds

Oil Under Pressure As API Reports Large Crude, Product Builds

10 months ago
Biden’s Summit of the Americas gets constrained by domestic politics

Biden’s Summit of the Americas gets constrained by domestic politics

1 year ago
Senator Markey Joins Merkley, Colleagues in Urging End of Fast-Tracking Oil and Gas

Senator Markey Joins Merkley, Colleagues in Urging End of Fast-Tracking Oil and Gas

1 year ago
ADVERTISEMENT
Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy sell-off is ‘very wrong’, warns US power group boss

November 28, 2023

UK energy price cap to rise by 5% in January

November 23, 2023

On its own, carbon capture is not a climate change panacea

November 22, 2023

ArcelorMittal eyes US LNG in search for stable gas supplies

November 21, 2023

US confident Arab states will not weaponise oil, says Biden adviser

November 20, 2023

Petrobras aims to transform Brazil into global energy power

November 19, 2023

Crude Oil

4 Days from Deadline, EU Fails To Agree On Russian Oil Products Price Cap

4 Days from Deadline, EU Fails To Agree On Russian Oil Products Price Cap

February 1, 2023
Oil rises after U.S. fuel stocks draw down; economic concerns loom

Oil prices settle steady on higher U.S. demand, weaker dollar

January 31, 2023
S&P 500 Down 1%; Crude Oil Drops Over 2%

S&P 500 Down 1%; Crude Oil Drops Over 2%

January 30, 2023
Russia Can’t Replace the Energy Market Putin Broke

Russia Can’t Replace the Energy Market Putin Broke

January 29, 2023

Investing

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

February 1, 2023
Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy investing poised to top money backing oil and gas after hitting a record

January 31, 2023
Crude Oil Shielded From Bond and Stock Market Rout

The Cushing® MLP & Infrastructure Total Return Fund Announces Fund Name Change

January 30, 2023
Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

January 29, 2023

Market

Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy sell-off is ‘very wrong’, warns US power group boss

November 28, 2023
Crude Oil Shielded From Bond and Stock Market Rout

UK energy price cap to rise by 5% in January

November 23, 2023
Crude Oil Shielded From Bond and Stock Market Rout

On its own, carbon capture is not a climate change panacea

November 22, 2023
Crude Oil Shielded From Bond and Stock Market Rout

ArcelorMittal eyes US LNG in search for stable gas supplies

November 21, 2023

OPEC

US Close- Fed signals more hikes coming, Powell says disinflation process begun, ADP

US Close- Fed signals more hikes coming, Powell says disinflation process begun, ADP

February 1, 2023
‘OPEC does not control the price’: OPEC President | OPEC News

‘OPEC does not control the price’: OPEC President | OPEC News

January 31, 2023
OPEC+ Closely Watches Chinese Factory Data

OPEC+ Closely Watches Chinese Factory Data

January 30, 2023
Week Ahead: FOMC, BOE, ECB, OPEC, NFP and Big Tech Earnings

Week Ahead: FOMC, BOE, ECB, OPEC, NFP and Big Tech Earnings

January 29, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use

© 2022 OilMarket.News

No Result
View All Result
  • Home
  • Market
  • Price
  • crude
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEC
  • brend
  • ships

© 2022 OilMarket.News

wpDiscuz
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.