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I generally agree with your thesis, but there are lots of risks, so I wouldn't bet the farm. The beauty and horror of the oil and gas industry is cyclicality from unexpected shocks. But for the advent of large scale shale oil development in the US, we'd still be rockin' $80 or $100 oil, and the offshore would be doing great. Right now, as far as the market is concerned, the shales (namely the Permian) will continue to be the marginal barrel of oil for the foreseeable future, and the shales are cheap compared to the offshore (deepwater in particular). But, there are thousands of engineers focused on reducing that offshore cost structure. Also, it seems unlikely that the Permian can keep the world balanced for too long, so prices are likely to go up and offshore projects will increase. We're seeing more offshore activity lately, but it's still a buyers market for offshore drilling and margins are basically break even, and will likely stay there until industry utilizations increase above 75-80%. Thus scrapping of older rigs may help actually return the market to profitability sooner. How long all this takes is unknown, and then there's always the risk that EVs reduce global demand for oil, extending the pain (but I personally think the latter risk is still far away). But if you believe the world needs offshore oil eventually (and I do), then companies with newer rigs and better balance sheets with as much liquidity runway as possible should eventually be worth multiples of what they are today. The offshore downturn is now finishing its third year. I sure hope we're not debating when the offshore recovers three more years from now. Seems reasonable to leg in to the drillers (that aren't bankrupt, i.e, SDRL and PACD) and add as the industry utilizations continue to increase. Good luck.
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