From the sounds on the grape vine, the blood bath is in fall swing. Lets hope they have a concentrated attack on their own internal operating systems in this new restructure. To counter low unit rates, they can only make up the loss by increased productivity.
Industry investment has still not returned. The Biggest single problem facing BLY from a boots on ground perspective is the total removal of industry barrier of entry. Rigs and equipment are going for ~10 to 15% of new replacement cost (and a lot less than 2010 rig prices!!). Meaning that what market share BLY believe they have will be under more threat than ever as new players seek to enter, when major drillers are distressed. In layman's terms, lower the capital cost, equals the lower the rate new players will have to charge. BLY's huge increase in capital, pre 2012 is their killer, and it forces them to set a rate above market or only allows them to compete in niche projects. They can't keep propping up jobs that aren't making money, as the company has no funds left.
In short, taking the knife to stop the bleeding, still won't make them competitive in this current environment, as their debt legacy doesn't allow them to.
BLY Price at posting:
6.5¢ Sentiment: None Disclosure: Not Held
