Monday, January 23, 2017

Not A Single Asset In Their Portfolio Outside The US That Competes With Their US Opportunities Right Now; But The Worst Is Not Yet Over For Revenues, Margins -- HAL -- Janauary 23, 2017

Earnings conference call: HAL -- over at SeekingAlpha.

In a discussion with another reader concerning when the majors would return to deepwater, highly complex, or longer duration projects, I noted from the conference call:
First, from the CEO:
Now, there has been a lot of debate as to what commodity price will reactivate the higher cost basins, such as the deepwater complex.
It is clearly higher than the price that we are seeing today. Also impacting the price will be OPEC compliance with its new production guidance.
Most people agree that the U.S. is now the world’s swing producer and it has demonstrated its ability to ramp up production quickly at a price that may make it difficult for deepwater projects to compete.
We believe that the race to get deepwater project costs down versus the impact on commodity prices on increasing U.S. shale production will have to play out over the course of 2017.
Therefore, we do not expect to see an inflection in the international markets until the latter part of 2017. In the meantime, our international customers remain focused on cash flow, and traditional contracting cycles will likely mute any dramatic rebound coming off the bottom. We expect revenue and margins to slowly grind down during 2017, as the market seeks to stabilize. [In other words, the worse is not yet over -- "we expect revenue and margins to slowly grind down during 2017..."]
Then, also from the conference call, in the Q&A portion:
I was talking to the CEO of one of our IOC customers Friday, obviously not going to say who it was. And he said that there was not a single asset in their portfolio outside the U.S. that competes with their U.S. opportunities right now. And to me that’s a pretty amazing statement to me in terms of really how much further commodity prices have to go up to bring some of these more either highly complicated or longer duration projects to the front of the queue get an FID decision made around them.
I opined:
What I get from that: no one is even thinking about decisions to go back to deepwater until late 2017, and reading between the lines, it sounds like even then (late 2017) there will be no one making decisions. So that puts us well into 2018, maybe later, where the majors say, "Hey, let's look at deepwater."

At best, 2018, they "pull the trigger" -- agree to go back to deepwater. It would be slowly; not a lot of activity. A year to gin up, that puts us into 2019. Depending on the approval process, etc., we are well into 2020 I think before we start seeing return to deepwater and it would not be a boom by any stretch.

We're at $50 oil; the comments above said "how much further commodity prices have to go to bring some of these .... highly complicated ... or longer duration projects to the front of the queue...."

"$50 oil is WTI/ Brent is about $53. " much further..." he didn't say but it certainly suggests well above high 60's and probably in to the $70s. It will be interesting to watch (from other sources) what folks think the price of oil needs to get to see projects off-shore. 
The Biology Page

Now, for something a little different. From The Economist, January 21, 2017.

I'm not going to say any more beyond this about my interest in pandas: it began with The Panda's Thumb, Stephen Jay Gould, c. 1980. Gould was a prolific writer; my introduction to his writing was The Panda's Thumb. My paperback copy is well worn.

In this week's issue of The Economist, linked above: two strange mammals illuminate the process of natural selection.

Some background:
  • panda: the word possibly derived from the Nepali phrase nigalya ponya, "bamboo-eater"
  • two types of pandas: black panda and red panda
    • black panda: a true bear
    • red panda: not a bear at all; related to weasels, raccoons, skunks
    • habitats overlap in mountainous regions of China and its neighbors
    • their last common ancestor 42 million years ago
  • their relatedness: they are both Carnivores -- you know, meat-eating
    • but, neither the black panda nor the red panda eat meat; they are strict vegetarians
    • and even more than strict vegetarians; their diet is "only" bamboo
    • both red and black pandas have six digits on their forepaws
    • the ancillary thumb is derived from one of the wrist bones and helps pandas hold bamboo stalks while eating
  • Chinese researcher now "unites" their genetics
  • three areas studied
    • the sixth digit
    • appetite for non-meat
    • metabolism: ability to digest bamboo
  • the article reminds readers of the taste buds: sweetness, sourness, bitterness, saltiness, and umami-sensitive (umami? think McDonald's Big Mac or Omaha Steaks)
  • convergent evolution
So, let's go to The Ancestor's Tale: A Pilgrimage to the Dawn of Evolution, Richard Dawkins, c. 2004, to see if pandas are discussed.

Dawkins mentions "panda" only once in the book (according to the index): p. 192, in the chapter on Laurasiatheres: a group of miscellaneous "toothy' rodents which have only one thing in common:
they all hail, originally, from the old norther continent of Laurasia.

The group includes seven orders, including Carnivora (dogs, cats, hyenas, bears, weasles, seals, etc).

And the only thing that Dawkins says about the panda, in this case, the "gentle, giant panda: not carnivorous, eating almost nothing but bamboo." And that's it.

Off to wiki:
  • they both belong to the order Carnivora (as already noted)
  • suborder: both belong to Caniforma; caniforms appeared on the scene 42 million years ago; then split into twelve families; three families are extinct (they went extinct long before man was on the scene); caniform means "dog-like"
  • the "groups" that split into the black panda and the red panda occurred fairly early after caniforms appeared on the scene
  • black pandas and red pandas are very distantly related within the caniforms, making them distant cousins at best

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