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Implications On GoM And Global Drilling Following The Biggest Oil Spill In History; Presenting The Short Candidates: DO, PDE And NE
With concerns about implications on GoM drilling post the Macondo spill dominating the investing world, as every day millions of gallons of fresh oil spill into the Gulf of Mexico, we present reports by Bank of America and JPM which disclose possible consequences from regulatory intervention, as well as all the rigs and operators in the GoM likely to be impaired by either surging insurance premiums, or something much worse, now that US offshore drilling policy is in greater flux than even ongoing financial reform. With today's adverse BP developments, Tuesday will likely see another bloodbath within the offshore drilling space, where RIG CDS have blown out more than in 2007 when the company was rumored to be a take private candidate more often than Radioshack is today (speaking of, in breaking news, today the market did not leak a new rumor about some idiot LBOing RSH ). The attached reports should provide a sufficient perspective on which managers and which operators are most likely to suffer the wrath of a skittish market.
BofA report:
JPM report:
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Life, and the markets, go on. Let's make a little money. Who needs shrimp and oysters anyhow?
I've been thinking that it may be a good time to consider a home on the Gulf, with a swimming pool of course. Prices should be reduced. If they do nuclear denotation, maybe they create a tsunami and I can build my very own beach cottage. We can spend our days leisurely picking up the dead sea "critters" and burning them....they should light relatively quickly. I don't eat much seafood anyway.
Just send Cheney and biggins palin !!!!!!!!!!! lol !!!!!!!!!!!!!
First, we don't have enough oil.
Now, apparently we have too much of it.
Make up your minds, people!
Reminds me of this one day I was watching TV and a commercial came on with some sanctimonious celebrity asking for money to deal with the problem of children going hungry in the US, then the very next commercial was some other celebrity spokesman asking for money to combat childhood obesity in this country.
I remember thinking to myself, "I'm actually living in a freaking cuckoo clock."
Hey, Rusty, funny you should mention commercials. I was just thinking today that they will be a good indicator of how the U. S. is doing in the long run. Saw a commercial for grass fertilizer, Haynes "bacon collar" t-shirts, and a couple of others that indicate that things are just great! When they stop advertising crap that we really don't need maybe the tides will be turning. (Sure hate using the word "tides" here...)
... or better yet, our nation's finest scientists have now discovered a way of using pieces of fried chicken in place of bread when making a bacon and cheese sandwich.
http://badbeat.la/wp-content/uploads/2009/09/kfc_doubledown_find.JPG
KFC commercial followed by one for Jenny Craig! Only in America...
so the 'in emergency break glass' move here is the relief well that takes 3 months?
way to cut costs!!! brilliant!
Would be nice if we made them drill 95% of said relief well before they start ops on the rig, no?
Would also be nice if instead of deploying useless booms, to just dump a shitload of oil-eating microbes into the Gulf which would make it spotless in several weeks.
But, now we're just thinking too rationally....
The microbes don't poop?
Actually I heard the poop out "Carbon Credits".
It's a win-win.
Sounds plausible, but there would most certainly be unintended consequences. Still might be the best option though.
If they do manage to stop the flow before the oceans are completely decimated, the best option may be to do nothing & let nature heal itself... There are oil consuming microbes already present in the ocean that would eventually cleanse it.
The oil flow must be stopped soon. At some point, our primary concern will shift from environmental damage that will take decades to fix & the prospect of expensive seafood (best case IMHO) to whether or not this is a survivable event for the majority of life on the planet. If the flow is not arrested soon, the oceans could become poisoned sufficiently to catastrophically disrupt the food chain. The effects would cascade up the food chain to all living creature on the planet.
A blatant rigged market won't seem as important if we're all dead. Perhaps the Fed is behind this as well? a large scale diversion... Hmmm.... Now if they can just somehow assign blame for the BP oil rig blowout to militant Islamic radicals, the spin cycle would be complete...
The Myrtle Beach ad left of the BP article: priceless.
Reserve now, while the beaches are still oil blob free!
Boston Harbor next....
The BP spill is going to further politicize the energy business. Which is kind of funny, because BP has, for most of its history, been an arm of the British government.
I see no reason as to why a nationalization by the just-as-incompetent American government (as per James Carville) would make the industry any safer.
Knowing the political culture, it makes zero sense to invest in the US in the long term. The culture is incredibly hostile to capitalism. Birth rates are low among the professional classes. The population is heavily indebted.
There will be a struggle, of course, but the political risk factors are just so difficult to quantify that it makes sense to just start exporting people, businesses, commodities, and anything else worthwhile elsewhere.
You have an aging population that's literally addicted to the drugs that the government and various government-supported "insurance" firms pay for. The voting rabble are not going to vote for capitalism - they'll vote to keep their drug supply coming, no matter what, because they're all a bunch of fucking junkies.
Even if the government immediately swapped over to a "libertopia," you'd still have to deal with hundreds of millions of whiny people - not just minorities, but those that have lived high on the cheap credit hog for generations - who have a cultural addiction to a Central Banking society.
The backlash from new legislation will remove competitors.
BP should be one of the subject of discussion next week end, June 4-7, in Sitges, Spain
http://www.americanfreepress.net/html/bilderberg__global_cabal_224.html
A set-up to bring about green tech is in the scope of possibilities.
Given belt tightening measures announced for Spain this year, this promises to be a hot event;..and definitively incognito..NOT.
never expected to take this black swan thing so litarally.....
http://skegnesshistory.files.wordpress.com/2008/11/oil_contaminated_swan...
The East coast has been buttwhipped and all we can think of is shorting some pathetic stocks... hey guys grow up... this thing is f*ing monstrous, I hope the fallout is contained but if not then the landscape will become like the middle east.. all barren and drenched in oil
Wow you are on the wrong website! This is an investment site! There are two sides to every trade, that is what a market is. In fact if these drilling companies fall another 20% I will be buying cheap calls. The puts are way to rich and for my capital shorting is just to risky.
ZH, nice euphemism " the Macondo spill" (technically correct in terms of the area in which they were drilling and conveniently leaves the name BP out of it and even the nature of the spill)
Try as they might, BP has so far been unsuccessful in their attempts to label this the Deepwater Horizon Oil Spill or some other innocuous name such as "Macondo". While I am sure there are certain interests that would love to disassociate the name BP with this spill I think it is important that the name BP remains firmly and permanently attached to this disaster.
the name "Deepwater BP Oil Spill" seems to be gaining traction
http://www.google.co.uk/#q=%22Deepwater%20BP%20Oil%20Spill%22&hl=en&prmd...
The real problem is mans insatiable desire for oil that it subsequently wastes driving uber-large SUVs, pleasure boats, etc.
What the US should do is add a $1.00 or so surcharge to the price of gas to help pay for the gulf clean-up and sure to occur future disasters.
Overconsumption in the US including frivolous use of oil products, overeating that adds to excess energy expenditure to grow the food, overcomsumption of meat products, and the list goes on.
Wake up people, the problem is caused by us and we have no one else to blame.
Ya i really gotta stop flying my 100 gallon an hour apache helicopter around just so I can shoot photogrophers. I'm so wasteful gosh darnit.
You really meant to say "shoot photographs" not "photographers" right? Right?
No photographers. They shoot RPG's at our justification PR system so you have to kill em.
Updated DOW charts :
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
BP DAILY SOLUTION:
http://williambanzai7.blogspot.com/2010/05/bp-daily-solution.html
I noted this disclosure in a readable typeface on Page One of the J.P. Morgan report.
"J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. "
The Merrill Lnch/BofA report has a similar Page One disclosure. Just wondering whether this type of Page One disclosure has been standard practice in these type of reports for many years, or whether this Page One disclosure is a new practice?
I dunno, but it sounds like it was taken straight out of the SEC lawsuit against GS.
Yes, that is what is sounded like to me too.
As the BP oil spill continues, the Gulf Coast’s fishermen, tourism industries, small businesses, and local governments are being threatened with serious economic costs. While the total economic impact of the spill remains to be seen, it is clear that the damages will be significant, given that the tourism and fishing industries alone generate billions of dollars each year.
Here are just a few examples of the value of the industries to the Gulf Coast.
Tourism—Gulf Coast
1. The value of the Gulf Coast’s tourism industry [EPA; Last Accessed 5.18.10]:
$20 billion
Tourism—Florida
2. The value of Florida’s tourism industry [Miami Herald; Last Accessed 5.18.10]:
$60 Billion
3. The percentage reductions in hotel occupancy rates between Pensacola and Panama City [Wall Street Journal; Last Accessed 5.18.10]:
30 Percent
4. The estimated percentage reductions in hotel occupancy rates during Memorial Day along the Florida panhandle[1] [Wall Street Journal; Last Accessed 5.18.10]:
70 Percent
Tourism—Alabama
5. The amount of money spent by tourists on Alabama’s beaches in 2008 [Reuters; Last Accessed 5.18.08]
$2.3 Billion
6. The number of workers supported by tourists on Alabama’s beaches in 2008 [Reuters; Last Accessed 5.18.08]
41,000
7. Percentage of cancellations already being recorded on Dauphin Island where the first tar balls came ashore [Wall Street Journal; Last Accessed 5.18.08]:
50 Percent
Tourism—Louisiana
8. The amount of money domestic travelers spent in Louisiana in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:
$9.3 Billion
9. The amount of tax revenue for generated by domestic travel in Louisiana for federal, state, and local governments in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:
$1.1 Billion
10. Number of Louisiana’s 64 parishes that received over $100 million in travel expenditures in 2008 [Louisiana Office of Tourism; Last Accessed 5.18.10]:
15
Commercial Fishing—Louisiana
11. The value of the commercial seafood industry in Louisiana [The Economist; Last Accessed 5.18.08]:
$2.4 Billion
12. The percentage amount of seafood that Louisiana catches in the continental U.S. [Wall Street Journal; Last Accessed 5.18.08]:
40 Percent
Commercial Fishing—Gulf Coast
13. The size of the area in the Gulf of Mexico currently closed to fishing [Associated Press; Last Accessed 5.18.10]:
46,000 square miles
14. The value of the commercial seafood harvest that was to begin on May 15th [Wall Street Journal; Last Accessed 5.18.10]:
$21 Billion
15. The percentage amount of total U.S. seafood production coming from the Gulf Coast [Wall Street Journal; Last Accessed 5.18.10]:
20 Percent
Recreational Fishing—Louisiana
16. The value of the recreational fishing industry in Louisiana [The Economist; Last Accessed 5.18.08]:
$1 Billion
http://dpc.senate.gov/docs/fs-111-2-93.html
Corexit 9500
Nalco Holding Company of Naperville, IL
Hey JW and FL,
Excellent analysis but these are per annum figure
It is crucial to appreciate that the gulf of mexico will be ruined for many years to come.
Ecological systems are fragile and this oil slick is bound to cause long term damage, so these per annum cost are myopic (they only look at human costs) and way too low. BP needs a through ass kicking for their colossal stupidity