The upstream oil sector still faces major domestic uncertainty months after the Macondo well incident, according to Dave Wilson, an Analyst at Howard Weil. Even with the end of the drilling moratorium, many companies haven’t been able to obtain permits for exploration and production in the Gulf of Mexico.
“The real question, I think, that’s facing the industry is allowing them to get permits to go back and drill. That seems to be the real problem,” Wilson said. “Even with the moratorium lifted, I think there is still some uncertainty due to the pace at which the government will be issuing permits to do exploration and production in the Gulf of Mexico.”
According to the analyst, E&P companies are exploring their options outside of the GOM, with some moving their rigs to international locations.
However, despite ongoing uncertainty, Wilson still sees investment opportunity in the E&P sector. “Top of my list right now, I do like Ensco (ESV) followed very closely by Transocean (RIG),” he said. “I know picking that stock, RIG, to be at the top of the list is a little controversial, as there’s a lot of uncertainty there regarding the ultimate liability that they’ll have.”
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