In making my selection for Best Stock for 2009, I expressed extreme hesitancy in choosing from the energy sector. A roundup of recent data points and telling actions by various players should clarify why I'm still spooked.
In mid-December, G. Allen Brooks, an energy investment banker who pens the thoughtful Musings From the Oil Patch newsletter, projected a 1,000-rig drop in the U.S. rig count, as calculated weekly by Baker Hughes
Today, I'm not really interested in exploring whether this collapse in activity is already priced into a stock like Nabors Industries
NATCO Group, a wellhead separation equipment supplier, came out with guidance today that modeled an average rig count drop to 1,450 for 2009. In other words, a 1,000-rig drop from the peak.
Mr. Brooks is clearly well-followed, and for good reason. He turns up nuggets like this one: StatoilHydro
These tidbits point to a growing disconnect, or what you might call a bid/ask spread, between E&Ps on the one hand, and drilling contractors like Transocean
Further Foolishness in the pipeline:
- My colleague David Lee Smith urges you not to clean out your energy closet.
- He even sees the chance for energy to be a solid sector in 2009.
- Whatever you decide, please consider using protection.