There are some big changes coming to this blog: I am joining an asset managment firm next year and will therefore not be commenting at all on individual companies from now on. The company I am joining is not an investor in offshore specifically, and I am certainly not joining to help them invest in the sector, but to avoid any appearence of conflict I will not discuss companies by name now. I will still continue to write about the energy transition, the growth of shale, and other energy topics that I find interesting but from a macro perspective only. I will also post notes on books and economic history… but for many subscribers you may want to think about cancelling because this will be a little esoteric.
I believe that the offshore oil supply chain still needs a large reduction in capital long-term to bring the risk-reward ratio of the industry into balance. That may mean a higher oil prices but it will certainly bring a concommitant reduction in the supply of offshore assets. I also really believe that shale has transformed the offshore industry beyond recognition and has put the golden days of the past (in terms of “excess” profitability) firmly into the realms of economic history. I await with interest to see how the private equity firms that have gone into the North Sea will exit as one of my other overriding questions of interest.
Shale will overshoot in investment terms there is no doubt. Whether the constraint will be resource related (i.e. water) or productivity related I don’t know… But I very much doubt the investment boom will slow in 2019 or 2020 and for many in the offshore supply chain that is still a funding bridge too far.