Thanks for the update and overview on the state of deepwater market Tommy. Any thoughts on the RIG/VAL merger as supportive of higher day rates or is it still too early to say? Also, although it isn’t a deepwater topic, any comments on the massive Vaca Muerte shale play in Argentina? I’m watching CVX, YPF, VIST, and HAL for insights on that one.
The RIG/VAL merger is positive for industry structure and dayrates but the deal needs to close, which should be by end of 2026. Recent dayrate prints reflect conditions of 2025 because of contracting lag, so do not yet reflect a more consolidated industry.
Yes on Vaca Muerta! I'm glad I have attentive readers like you because I should have put it as another source of reserve replacement. I think infrastructure constraints will keep Vaca Muerta from producing as much as the Permian but its a great resource. Vista Energy is an interesting high yield E&P in Vaca Muerta I will cover in the future but need to research more. Vaca Muerta will surely grow but tight oil is services-intensive, so you need rigs, frac spreads, frac sand, etc. which I believe is a material a constraint on its growth, as well as supporting infrastructure to export to global markets. Its an evolving region with promising potential but I don't see a Permian-like growth story, yet at least.
Thanks! I’ll share what I find on Vaca Muerte from time to time if it seems impactful. One angle I find interesting regarding the infrastructure need is the possibility of tying into what already exists within the region, principally the Trans-Andean Pipeline (Otasa) and the refineries based in Chile. Utilizing these facilities could seemingly open up the Pacific shipping routes to Asia. But your main point on the need for large scale drilling infrastructure to really elevate the play is well-taken.
Yes, frontier exploration won’t produce barrels of equivalent until the 2030’s. Some discoveries with existing infrastructure will come sooner but you’re correct — it’s a long cycle
Deepwater is truly a vicious sector, making the mining sector look as stable as a widows and orphans fund, VAL, DO, NE, TDW, bankruptcies, RIG cast down to the underworld of penny stocks, but patience and a watchful eye will yield great rewards. Recommend a monthly viewing of, "There will be Blood," as a bracer and avoid watching, "Deepwater Horizon," Be Well.
Thanks for the update and overview on the state of deepwater market Tommy. Any thoughts on the RIG/VAL merger as supportive of higher day rates or is it still too early to say? Also, although it isn’t a deepwater topic, any comments on the massive Vaca Muerte shale play in Argentina? I’m watching CVX, YPF, VIST, and HAL for insights on that one.
The RIG/VAL merger is positive for industry structure and dayrates but the deal needs to close, which should be by end of 2026. Recent dayrate prints reflect conditions of 2025 because of contracting lag, so do not yet reflect a more consolidated industry.
Yes on Vaca Muerta! I'm glad I have attentive readers like you because I should have put it as another source of reserve replacement. I think infrastructure constraints will keep Vaca Muerta from producing as much as the Permian but its a great resource. Vista Energy is an interesting high yield E&P in Vaca Muerta I will cover in the future but need to research more. Vaca Muerta will surely grow but tight oil is services-intensive, so you need rigs, frac spreads, frac sand, etc. which I believe is a material a constraint on its growth, as well as supporting infrastructure to export to global markets. Its an evolving region with promising potential but I don't see a Permian-like growth story, yet at least.
Thanks! I’ll share what I find on Vaca Muerte from time to time if it seems impactful. One angle I find interesting regarding the infrastructure need is the possibility of tying into what already exists within the region, principally the Trans-Andean Pipeline (Otasa) and the refineries based in Chile. Utilizing these facilities could seemingly open up the Pacific shipping routes to Asia. But your main point on the need for large scale drilling infrastructure to really elevate the play is well-taken.
Exploration sounds like it’s back.
The reality is how long it takes to actually show up.
Yes, frontier exploration won’t produce barrels of equivalent until the 2030’s. Some discoveries with existing infrastructure will come sooner but you’re correct — it’s a long cycle
Great writeup as always. Much appreciate your insights.
Earnings season may yield some info, so I hope to update afterwards. Thanks for continuing to read, Stuart.
Sincere thanks for the update. Excellent.
Deepwater is truly a vicious sector, making the mining sector look as stable as a widows and orphans fund, VAL, DO, NE, TDW, bankruptcies, RIG cast down to the underworld of penny stocks, but patience and a watchful eye will yield great rewards. Recommend a monthly viewing of, "There will be Blood," as a bracer and avoid watching, "Deepwater Horizon," Be Well.
Great and encouraging write up, "You can never be too sure of anything in oil and gas," a painfully true statement. Thanks.
Thanks for your time, Dio. I have broken that rule a time or two in my past. Painfully true indeed!