It is no secret that more than a few oil companies have abandoned their operations on land and left them in a state that could be described as ramshackle. For a few examples, you might consult Mrs. Burns (aka "Malulo Numero Uno") at her Rancho Los Malulos blog. With the lack of oversight of some oil companies' onshore operations and their lack of regard for adequately packing up their onshore operations the $20.00 question is it safe to assume the same is true offshore? I might be willing to bet some money that it it is.
How much money? At least $6.00 share which brings us to Cal Dive International, Inc. (NYSE ticker: DVR ) .
Cald Dive International, Inc. is a Houston, TX based provider of underwater services to the offshore oil industry. Cal Dive's suite includes shallow and deepwater diving services, undersea pipeline construction and repair, installation of various offshore and underwater oil production widgetry, etc. Incidentally, Cal Dive also decommissions and removes alot of the same kind of stuff they put in.
After reading the fore mentioned AP article, I was delving into Cal Dive's 2009 Form 10-K and found the following tid bit on page 9:
"Aging production infrastructure in the Gulf of Mexico. According to the MMS, there are nearly 4,000 oil and natural gas production platforms in the Gulf of Mexico, of which approximately 65% are more than 15 years old. A significant portion of the older platforms and other infrastructure in the Gulf of Mexico lie in water depths of 1,000 feet or less, which is our core market. These structures are generally subject to extensive periodic inspections, require frequent maintenance and will ultimately be decommissioned as mandated by various regulatory agencies. Consequently, we believe demand for our inspection, maintenance, repair, decommissioning and salvage services will remain strong. We also believe the regulatory influence makes demand for these services less discretionary, and therefore more stable, than those arising from exploration, development and production activities. Additionally, when hurricanes cause offshore infrastructure damage in the regions in which we operate, our experience is that the demand for our services increases significantly. We experienced this trend following hurricanes Ivan, Katrina and Rita and, more recently, hurricanes Gustav and Ike."
Sounds like a recipe for future revenues in general but given the current realities in the Gulf and the rhetoric of various politicians, Cal Dive might find itself busier than it anticipates.
Cal Dive's history, location, fleet size, etc. puts them in a good position to take on any increasing volume of work in the Gulf of Mexico that results from the fallout from BP's ongoing mess.
Of interest, Cal Dive has invested in a piece of equipment they call the "Green Turtle" If the company fact sheet is factually correct, it would appear that Cal Dive will have competitive advantage in hand: increased safety, speed and economy when it comes to abandoning offshore oil wells. Cal Dive's partner on the Green Turtle project is Beeren Berg Frontier, a Norwegian company. According to their press release, the Green Turtle is essentially production ready.
Leading up to the recession, Cal Dive successfully expanded its operation through acquisitions.
A little sniffing around the typical measures of valuation are a mixed bag for Cal Dive: P/E is not bad, book value is attractive as are a few other numbers but the debt/equity number gives the appearance of being over leveraged (yet better than its industry and the S & P 500). However, the .79 Price/Sales beats industry, sector and the S & P 500).
Two more near term attractions are that Cal Dive is trading towards the low end of its 52 week range and just today got ahead of its 50 day moving average.
All the wonky stuff aside, Cal Dive International has a nice quality: it does business internationally and has boats. They do about 85% of their work in the Gulf of Mexico and 15% elsewhere in the World. Cal Dive is like a double hedge: they can either ramp up or roll up underwater activity depending on which direction the U.S. Government and the offshore oil industry want to go. Too, if the U.S. moves away form offshore petroleum activity, Cal Dive can sail to where the work is offshore petroleum appears to be progressing elsewhere at this time regardless of BP's mess in the Gulf of Mexico.
I have to do a little more looking but may open a small position in Cal Dive International, Inc. in the morning as purely speculative bet.
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