This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

[video] Dicker: Offshore Hijinks

NEW YORK ( TheStreet) -- I was talking today to Stephanie Link, co-portolio manager of Action Alerts PLUS, about the recent auction of the Libra field in Brazil, an off-shore asset that potentially holds up to 12 billion barrels of oil.

Such an amazing discovery with such development potential was thought to attract many dozens of oil companies to bid on the lease for that asset, but instead brought only one bid from a consortium of Petrobras (PBR), Royal Dutch Shell (RDS.A), Total (TOT) and two Chinese oil companies.

It is a fascinating story of how governments can remove the incentive for oil companies to invest in new finds if they are hell-bent on extorting from those companies deep incentives, regulations and taxes.

In this one lease alone, the Brazilian government required that Petrobras, which is largely state-influenced, be a 40% stake holder. It also procured a $7 billion signing fee from the other participants and will ask for $185 billion in incentives from the consortium over the 35-year lifespan of the lease agreement.

This is in contrast to U.S. offshore assets, which have experienced high auction participation and prices even with the added regulation that has been brought on in the wake of the 2010 Deepwater Horizon disaster.

That keeps me away from buying Petrobras, despite its run this year and keeps me focused on U.S. Gulf of Mexico deepwater opportunities including Chevron (CVX), Anadarko Petroleum (APB) and BP (BP).

I talk more about this with Stephanie in the video above.

At the time of publication the author had no position in any of the stocks mentioned. Action Alerts PLUS has a position in APC and NOV.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

 

Dan is currently President of MercBloc LLC, a wealth management firm and is the author of "Oil's Endless Bid," published in March of 2011 by John Wiley and Sons.

 

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on CNBC, Bloomberg US and UK and CNNfn.

 

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $132.72 1.90%
FB $82.34 0.99%
GOOG $557.00 -1.40%
TSLA $237.51 8.70%
YHOO $44.68 0.36%

Markets

DOW 18,130.19 +50.05 0.28%
S&P 500 2,121.66 +3.97 0.19%
NASDAQ 5,103.3630 +11.2780 0.22%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs