Of course, oil and gas exploration is a high-risk business, and not surprisingly, there were some significant stock pops in some of the more speculative oil and gas sector drilling players.
Hercules Offshore (HERO - Get Report) got off to a quick start on Wednesday, up 6% right after the White House announced its intention to open up offshore reserves. Analysts say that highly leveraged Hercules is more like an option than an equity play.
Nevertheless, investors seemed to come to their senses regarding the vague potential from the sea change in offshore energy, and Hercules ended Wednesday only up 3 cents, to $4.32, and was up by 1.4% on Thursday, to $4.38. Vantage Drilling (VTG - Get Report) was up 2.7% on Thursday, but 3% of the $1.52 drilling stock represented a gain of 4 cents.
There's a much larger issue related to risk and offshore potential than the most speculative of the drilling stocks. History provides ample evidence of why investors should retain a healthy level of skepticism about the offshore energy assets.In the Georges Bank area of the North Atlantic, for example, energy company consortiums drilled in 1976 and 1977 to gain geologic information prior to offshore Federal petroleum exploration leasing. After leases were awarded, eight industry exploration wells were drilling between 1981 and 1982. Energy companies forked over more than $816 million dollars for the offshore tracts. The rewards? As noted in a report from the Department of the Interior in 2000, "None of these