“The Rig Devastation is Quite Significant”

The best energy industry research firm I know is Petrie Parkman, run by oil research veteran Tom Petrie—a man I interviewed with 25 years ago when I was first looking for work on Wall Street, although he wouldn’t remember me from the Sith Lord.

And from their morning research notes comes the following comment regarding Rowan Companies, a large operator of jack-up drilling rigs in the Gulf of Mexico:

Rowan has its own planes and were thus one of the first on the scene to witness the impact. They say that the rig devastation is quite significant and the pilots reported that in an area where they previously would see about 15 jack-ups there were none visible. “None visible.” Of course, while Rowan was flying planes over the area where there were no rigs “visible,” the stock market had already decided the impact of Hurricane Rita was not too severe, based largely, I gather, on the fact that Fox and CNN TV reporters in rain gear were able to walk around parking lots in Galveston shortly after the storm passed and could see no visible damage to the infrastructure miles out in the Gulf of Mexico.

By the end of yesterday, however, the oil markets had corrected the market’s misinterpretation of the Talking Heads’ somber yet relieved reports, and bid oil prices back up—while natural gas never even bothered to head-fake anybody, and just stayed strong.

Meanwhile, Rowan sees a more significant impact on their business besides the loss of a few of their own rigs, thanks to the apparent disappearance of so many other rigs in that region: drilling rates in the Gulf should “sky rocket,” according to the Petrie Parkman note.

No inflation indeed! Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.