The Gulf of Mexico is heating up again and the excitement is returning for deep water drilling. After three years of declining production from the Gulf, we are now poised to see a return of strong production growth, perhaps even eclipsing the growth of the much more hyped tight oil plays of the Bakken and Eagle Ford.
And that’s great for investors because the stocks most closely associated with deep water drilling in the Gulf of Mexico have been left mostly for dead since the Macondo disaster of 2010. As compared with the high-flying Bakken stocks, these are values that shouldn’t be overlooked.
And for premium readers of oilprice.com, I’ve got a few specific ideas on where to look for that value.
First, the Gulf of Mexico only contains a few key players, unlike shale oil plays. For the majors, Shell and BP still dominate the assets in deep water in the Gulf, with Chevron and Conoco making inroads, particularly after the latest massive deep water finds at Coronado and Shenandoah. And while Shell is too diverse to take advantage of by investors looking for Gulf-specific stocks, BP is not – they have sloughed off assets to pay for Macondo, but have retained much of their Gulf production, including their very juicy ‘Mad Dog’ deep water field off of Louisiana.
With the overhang of Macondo finally about to disappear for good or ill with the resolution of the civil suit ongoing in New Orleans,…