Question on astronomical day rates referring to tightening of the market. There was a consensus between you that no matter the day rates, oil producers will pay. Does this not affect there break even prices? Thanks.
Hey John, I think what we are discussing there was that in the grand scheme of the E&P's budgets for these developments, the economics are not changed by paying an extra $100-$200K per day in day rate for the drill ship. In other words, day rates can rise significantly and the E&P wont feel it. Does that help? If I have missed your question please let me know
Oh man I don’t know that’s a great question it would be 1) extremely high 2) it would vary by project. It wouldn’t surprise me for the UDWs to get to $1M per day
Great points here - I totally agree. Your last sentence says it all - owning unpopular things in a market that seemingly goes up everyday is a really hard thing to do as the duration of large cap outperformance and the flow of funds has been so persistent
Question on astronomical day rates referring to tightening of the market. There was a consensus between you that no matter the day rates, oil producers will pay. Does this not affect there break even prices? Thanks.
Hey John, I think what we are discussing there was that in the grand scheme of the E&P's budgets for these developments, the economics are not changed by paying an extra $100-$200K per day in day rate for the drill ship. In other words, day rates can rise significantly and the E&P wont feel it. Does that help? If I have missed your question please let me know
Yep, answered the question thanks. Follow up, just to understand thresholds, what price do day rates start becoming unmanageable to the E&P?
Oh man I don’t know that’s a great question it would be 1) extremely high 2) it would vary by project. It wouldn’t surprise me for the UDWs to get to $1M per day
Thanks.
Great points here - I totally agree. Your last sentence says it all - owning unpopular things in a market that seemingly goes up everyday is a really hard thing to do as the duration of large cap outperformance and the flow of funds has been so persistent