I've written previously about a couple of smaller Deepwater producers that I think are very interesting given that the fog of government legislation seems to be lifting from their futures.
http://www.gurufocus.com/news.php?id=101862
http://www.gurufocus.com/news.php?id=101391
The share prices of both ATP and Cobalt were crushed after the BP spill as investors had very sensible concerns about what the government was going to do with legislating the industry going forward.
Clarity is emerging with respect to government action and it appears that legislation that eventually is enacted is not going to push the independents out of business.
Today there was news with respect to the Senate bill that is being worked on. Harry Reid was not even able to get it to the floor this week due to lack of support from both Republicans and some Democrats who want to make sure independent producers can continue operating. Here are details from an article in the New York Times:
Negotiations by moderate Democrats on liability and revenue-sharing provisions in the oil-spill response bill yanked from the Senate floor yesterday may prove key to passage of the measure this fall.
The Democrats' bill would eliminate a liability cap for companies involved in a spill. Republicans and some moderate Democrats say such a measure would prevent small- and mid-sized energy companies from operating offshore.
The Republican measure includes a more spill-friendly liability formula than Democrats are promoting, but Democrats say their oil-spill response proposals do not do enough to hold BP PLC accountable for the damage caused by the spill or to reduce U.S. dependence on foreign oil.
Sen. Mark Begich (D-Alaska) has said he would not vote for the Democrats' bill without changes to the liability language and inclusion of a revenue-sharing measure. He -- along with Sens. Mary Landrieu (D-La.) and Mark Pryor (D-Ark.) -- are working on so-called compromise language that would address those issues.
"We are working towards it, and I think there is a way to keep the taxpayers off the hook, which is what one of our goals is, and keep the industry robust and able to work ... particularly the independents, and we are making progress," Landrieu said yesterday.
Begich said, "We're getting close."
The language would likely raise the initial liability cap for companies involved in a spill from $75 million to $250 million, aides said last week. If damages exceed $250 million, then a $10 billion mutual insurance fund fed by industry would kick in. And if the economic damages associated with the spill maxed out that fund, payment responsibility would return to the company responsible for the spill with no limit on liability.
The fund would be fed by all companies operating offshore, paying into it based on how much oil and gas they produced and through fees associated with the amount of the bonus bids paid for each offshore lease.
Sen. Robert Menendez (D-N.J.), a vocal opponent of offshore drilling and author of the unlimited liability language in Reid's bill, said he agrees with the senators' key principle.
"They agree with me on unlimited liability; they agree with me on the question that the taxpayer should never be held responsible," Menendez said. "Their only question -- which I think is easily worked out so that's why we were all on the same page -- is how the industry shares that responsibility."
So it is looking virtually certain given the details in the House bill passed Friday (which was friendly to small producers) and with what the Senate is working on that the non-major offshore producers are going to get through this.
Further good news can be found from comments made yesterday by Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement who said "I think it is everybody's hope that we will feel comfortable enough that the moratorium can be lifted significantly in advance of Nov. 30,"
So we have the liability and financial responsiblity requirement threat lifting and it appears that at worst the drilling moratorium won't extend past the end of November.
I think a basket of E&P companies from the Gulf will perform very well over the next two years. If you want to focus on two that have been sold off the most you might consider ATPG and CIE
http://www.gurufocus.com/news.php?id=101862
http://www.gurufocus.com/news.php?id=101391
The share prices of both ATP and Cobalt were crushed after the BP spill as investors had very sensible concerns about what the government was going to do with legislating the industry going forward.
Clarity is emerging with respect to government action and it appears that legislation that eventually is enacted is not going to push the independents out of business.
Today there was news with respect to the Senate bill that is being worked on. Harry Reid was not even able to get it to the floor this week due to lack of support from both Republicans and some Democrats who want to make sure independent producers can continue operating. Here are details from an article in the New York Times:
Negotiations by moderate Democrats on liability and revenue-sharing provisions in the oil-spill response bill yanked from the Senate floor yesterday may prove key to passage of the measure this fall.
The Democrats' bill would eliminate a liability cap for companies involved in a spill. Republicans and some moderate Democrats say such a measure would prevent small- and mid-sized energy companies from operating offshore.
The Republican measure includes a more spill-friendly liability formula than Democrats are promoting, but Democrats say their oil-spill response proposals do not do enough to hold BP PLC accountable for the damage caused by the spill or to reduce U.S. dependence on foreign oil.
Sen. Mark Begich (D-Alaska) has said he would not vote for the Democrats' bill without changes to the liability language and inclusion of a revenue-sharing measure. He -- along with Sens. Mary Landrieu (D-La.) and Mark Pryor (D-Ark.) -- are working on so-called compromise language that would address those issues.
"We are working towards it, and I think there is a way to keep the taxpayers off the hook, which is what one of our goals is, and keep the industry robust and able to work ... particularly the independents, and we are making progress," Landrieu said yesterday.
Begich said, "We're getting close."
The language would likely raise the initial liability cap for companies involved in a spill from $75 million to $250 million, aides said last week. If damages exceed $250 million, then a $10 billion mutual insurance fund fed by industry would kick in. And if the economic damages associated with the spill maxed out that fund, payment responsibility would return to the company responsible for the spill with no limit on liability.
The fund would be fed by all companies operating offshore, paying into it based on how much oil and gas they produced and through fees associated with the amount of the bonus bids paid for each offshore lease.
Sen. Robert Menendez (D-N.J.), a vocal opponent of offshore drilling and author of the unlimited liability language in Reid's bill, said he agrees with the senators' key principle.
"They agree with me on unlimited liability; they agree with me on the question that the taxpayer should never be held responsible," Menendez said. "Their only question -- which I think is easily worked out so that's why we were all on the same page -- is how the industry shares that responsibility."
So it is looking virtually certain given the details in the House bill passed Friday (which was friendly to small producers) and with what the Senate is working on that the non-major offshore producers are going to get through this.
Further good news can be found from comments made yesterday by Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement who said "I think it is everybody's hope that we will feel comfortable enough that the moratorium can be lifted significantly in advance of Nov. 30,"
So we have the liability and financial responsiblity requirement threat lifting and it appears that at worst the drilling moratorium won't extend past the end of November.
I think a basket of E&P companies from the Gulf will perform very well over the next two years. If you want to focus on two that have been sold off the most you might consider ATPG and CIE
