Tuesday, May 25, 2010

Tidewater's Offshore Future

Here's one of the reasons I was willing to go long Tidewater, in addition to its admirable long term fundamentals.  Offshore oil drilling has a bright future in the U.S.:

Drilling for oil and natural gas off the Virginia coast has been touted as a potential economic boon for the state and Hampton Roads that would create thousands of jobs and generate billions of dollars in investment in the region.
(snip)

In March, President Barack Obama opened the door for Virginia to become the first Atlantic state where oil could be drilled off the coast. Plans for a lease sale in 2012 appeared to be moving forward until an oil rig exploded, killing 11 workers and spewing oil into the Gulf of Mexico.

Look past the noise over the BP Deepwater Horizon disaster and see the future.  A transitional era to renewable energy sources will last decades.  American society can't function without a steady supply of petroleum.  The low-hanging fruit has been picked, so future oil supplies will be more difficult to extract.  Deep ocean rigs drilling for oil in the Gulf of Mexico and elsewhere will need service fleets, and Tidewater has that capability in abundance. 

Full disclosure:  Long TDW with covered calls; no position in BP.