Industry shellshocking newsBetween Peyto and Repsol and the Precision Drilling buying Cwc, crazy amount of news to digest.
I think the PD buy of Cwc is extremely terrible to drilling inustry. I don't think it is good for Precision or the drilling industry. No win merger. Hurts whole industry.
Hurts the industry as the 141m price for cwc is so so cheap. It devalues all drillers trading mutiples.
The 7% interest rates are really lowering the asset value of the drillers as obviosly no private money jumping into the market.
CWC had a really competitive drilling fleet, everything was 3200-5000m in canada, 141 is such a low value.
I don't like it even from the point of view of Precision as how can precision raise the day rates of the three cwc drilling rigs currently working? Vermillion, IPO, and BNE are only rigs on drilling side CWC has going in Canada. Still too many competiors left with rigs like Savanna, Horizon, Stampede that how can PD really increase the price to CWC current customers.
Still too many rigs for amount of work in Canada that I can see PD wanting to get 7 rigs off the market from bids but this is a fart in the wind. Heck even akita has spare capacity to bid on Cardium work.
CWC service rigs are good and prob decently busy, havent looked lately but can PD run this lean like CWC did cost wise.
PD wasnt getting much cardium work as dont think can compete with local based red deer drillers.
CWC was really competitive near Red Deer as they always have work but further north towards Peace River probably have too much overhead to outbid companies with bases closer to peace river to get clearwater work.
That why I would have rather seen Repsol go to a private company so more work for drilling companies. Bad for drillers the less companies that exist instead of new ones being created.
If Savanna ever bought Horizon drilling then pricing power would switch to drillers from the oil and gas companies. And day rates are more likely to go up.
In current market conditions, considering the inflation drillers have had to take, I think energy companies are getting a great deal on dy rates and all due to over supply of good rigs available.