State of the Oil Industry

Wonderful article on the state of the oil industry. Key points in the article:

• Mark Pease, senior vice-president of exploration and production for Anadarko Petroleum Corp., believes "There really is a lot of potential and reserves to be found in North America. There's going to be a lot of increase in activity."

• "I've been in the industry for 23 years now, and I certainly believe that the industry fundamentals are the strongest I've seen in my career." mentioned Mark Urness, Merrill Lynch director of oil services and drilling research.

• "Our forecast shows drilling activity reaching the highest level in 20 years. And we expect sustained growth in 2005-06 as long as [global] economic growth remains strong." again noted by Urness.

• In the Gulf of Mexico, said Danny McNease, chairman and CEO of Rowan Cos. Inc., drilling rigs are in short supply, and a spate of lease expirations looms.

Please read on...

Robots

Investors looking for the next big wave should pay attention to the growing utilization of robots. As this article states...falling component prices are increasing demand for automation. The use of robots is predicted to rise sevenfold over the next few years.

The leader in automation is Japan with approximately 400,000 industrial robots currently in use. Japan is leading this movement partly due to their aging population.

Many believe robots will become the caretakers of our aging seniors in the years to come.

Oil Spending Growth

Oil equipment stocks fully priced? The first of many articles forecasting increased spending in the oil patch. Read on...

Oil Prices and Rig Counts

The charts from yesterday's post inspired me to map oil prices onto the US Rig Count Chart. Keep in mind the chart below reflects inflation adjusted oil prices.


Data provided by Baker Hughes, Inc. and inflationdata.com

Record highs in oil prices and rig counts occurred the same year...1981. While the record low in oil prices struck in 1972...one year after the record low in rig counts.

Oil prices have risen 130% since their 1998 bottom. While rig counts have only risen 28% since their 1999 bottom. Compare this to 1978 when oil prices rose 70% from their 1972 bottom and rig counts rose 140% from their 1971 bottom.

My father worked as a field engineer for Schlumberger back in the 60's, 70's, & 80's. He remembers quite fondly the various mom and pop oil companies that popped up in those days. Very similar to the dot com's of the 90's.

Most of the mom and pop drillers are long gone. The remaining companies are hesitant to increase drilling dollars for what they believe is a temporary situation in oil prices. The longer oil prices remain over $40/barrel...the less hesitant these companies become. Until then be prepared for higher oil prices.

Oil Rig Counts

I decided to chart the World and United States Oil Rig Counts...due to the recent spike in oil prices.

Yearly Worldwide Oil Rig Count Averages...

data provided by Baker Hughes, Inc.

Yearly United States Baker Hughes Oil Rig Count Averages...

data provided by Baker Hughes, Inc.

United States oil rig counts began trending upward in 1973. Their 1981 peak occured just one year prior to the start of the 18 year US equities bull market. US Oil rig counts hit their record low in 1999...one year prior to the conclusion of the 18 year equities bull market.

Some Bushisms for the Soul...

Here's a sprinkle of giggle to your day...

• "Too many good docs are getting out of the business. Too many OB/GYN's aren't able to practice their love with women all across the country."—Sept. 6, 2004, Poplar Bluff, Mo.

• "Tribal sovereignty means that, it's sovereign. You're a—you've been given sovereignty, and you're viewed as a sovereign entity. And, therefore, the relationship between the federal government and tribes is one between sovereign entities."—Washington, D.C., Aug. 6, 2004

• "Secondly, the tactics of our—as you know, we don't have relationships with Iran. I mean, that's—ever since the late '70s, we have no contacts with them, and we've totally sanctioned them. In other words, there's no sanctions—you can't—we're out of sanctions."—Annandale, Va., Aug. 9, 2004

• "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we."—Washington, D.C., Aug. 5, 2004 (Thanks to Alicia Butler.)

• "I want to thank my friend, Sen. Bill Frist, for joining us today. … He married a Texas girl, I want you to know. (Laughter.) Karyn is with us. A West Texas girl, just like me."—Nashville, Tenn., May 27, 2004

• "I'm honored to shake the hand of a brave Iraqi citizen who had his hand cut off by Saddam Hussein."—Washington, D.C., May 25, 2004

• "This is historic times."—New York, N.Y., April 20, 2004

• "Recession means that people's incomes, at the employer level, are going down, basically, relative to costs, people are getting laid off."—Washington, D.C., Feb. 19, 2004 (Thanks to Garry Trudeau.)

• "The march to war affected the people's confidence. It's hard to make investment. See, if you're a small business owner or a large business owner and you're thinking about investing, you've got to be optimistic when you invest. Except when you're marching to war, it's not a very optimistic thought, is it? In other words, it's the opposite of optimistic when you're thinking you're going to war." —Springfield, Mo., Feb. 9, 2004 (Thanks to Garry Trudeau.)

• "The ambassador and the general were briefing me on the—the vast majority of Iraqis want to live in a peaceful, free world. And we will find these people and we will bring them to justice."—Washington, D.C., Oct. 27, 2003 (Thanks to Robert Hack.)

• "See, free nations are peaceful nations. Free nations don't attack each other. Free nations don't develop weapons of mass destruction."—Milwaukee, Wis., Oct. 3, 2003

• "I was proud the other day when both Republicans and Democrats stood with me in the Rose Garden to announce their support for a clear statement of purpose: you disarm, or we will."—Speaking about Saddam Hussein, Manchester, N.H., Oct. 5, 2002 (Thanks to George Dupper.)

For more Bushisms read on...