2013 Offshore Outlook

Keith Kohl

Written By Keith Kohl

Posted October 30, 2012

Forget politics.

I know it won’t be easy. The torrential downpour of political ads are blasting every spot in today’s media.

We’re being inundated by grassroots campaigners, phone calls, door-to-door pestering, a flood of commercials during the evening news…

Perhaps a brief respite isn’t such a bad thing.

And it’s easier to tune it all out when you consider that for many sectors, it simply won’t matter who’s sleeping at 1600 Pennsylvania Avenue for the next four years.

This is especially true for investors in one of the more media-vilified sectors in the oil industry — and it’s giving us a profitable advantage right now…

Offshore Outlook 2013

People may not realize just how long we’ve been drilling offshore.

The world’s first offshore oil wells were actually drilled more than a century ago in California, and it wasn’t a project that would go over well with the public today…

Imagine a sitting president suggesting we open up offshore drilling to the East Coast.

The beautiful beaches that line the shore from Maine to Florida would suddenly look like this:

summerland oil field

Not an inviting scene, is it?

Luckily, we’ve come a long way since then.

Today companies are spending up to $100 million to drill one well in the ultra-deep waters of the Gulf of Mexico. More than $145 billion is spent globally on deepwater technology and infrastructure.

And 2013 is shaping up to become a strong year for offshore investments…

In December 2011 approximately 21 million acres were auctioned off in the western Gulf of Mexico. The sale raked in bids totaling more than $320 million.

A similar auction last June pulled in nearly two billion dollars in high bids in a 39 million acre sale.

The next sale, scheduled for late November, is offering almost 21 million acres in the Gulf of Mexico.

We’ll see the same story play out in 2013 when another sale takes place just five months from now in March, putting 38 million acres on the auction block.

And things are slated to get even better. Because rather than sitting on its thumbs, the U.S. is giving these leaseholders an ultimatum: Use it or lose it. Obama reiterated as much during the debates.

If the current president is interested in developing our offshore resources, we know there won’t be opposition from the other side of the aisle (not so long as they maintain their “Drill, Baby, Drill” attitude).

And that means the perfect storm is brewing for a surge of offshore drilling activity over the next few decades.

Safety First, Profits Follow

The huge oil and gas companies being driven to develop their offshore leases in the Gulf of Mexico will be forced to spend billions of dollars over the next several decades.

As I just mentioned, the best part in all of this is it won’t make a lick of difference which party takes office after November’s election. And that’s because both political puppets have the same endgame in mind: to develop the United States’ energy resources at all costs.

That’s why Obama is drawing a line in the sand for companies sitting on their offshore leases.

The only question you should be pondering is how to play this upcoming surge in offshore activity.

Do you exhaustively search out who holds the best leases? Do you try to figure out which member of Big Oil has the best chances of avoiding a repeat of the BP disaster?

The answer is neither.

I’ve never made my personal distaste for the supermajors a secret…

Not only are they being squeezed out of the world’s remaining oil fields (remember, more than 95% of the world’s oil reserves are controlled by national oil companies), but now they have to spend billions of dollars in unconventional plays to continue increasing production.

And we can pinpoint directly where they’re activity is being corralled: North America.

The clear-cut winner here won’t be the Gulf leaseholders, but rather the offshore drillers Big Oil will be forced to hire to develop their offshore acreage.

offshore stocks 10-29
These days, a key part of every investor’s strategy should be safety.

That said, the multi-year nature of these lucrative six-figure offshore contracts add a long-term value that we may not find in other areas.

Some of the bigger offshore contract drillers like Ensco offer a respectable annual yield slightly under 3%.

And if you’re looking for a more risk-averse portfolio, you can’t find a better way than collecting regular dividend payouts from the world’s largest billion-dollar corporations…

With a new year of energy investments on the horizon, you can expect more insight and more winning plays from Energy and Capital in the weeks to come.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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