11/24/10 Alexandria, Virgina — McMoran Exploration Co. (NYSE:MMR) performs on- and offshore exploration, development, and production of oil and natural gas in areas like the Gulf Coast and the Gulf of Mexico. Today, Byron King, Agora Financial’s editor of Energy & Scarcity Investor, has the company on his mind due to a recent and significant uptick in its share price.
What’s behind the move? To answer this question we look to King’s most recent message to readers:
“Despite the vagaries of offshore drilling in the U.S., McMoran Exploration Co. (NYSE:MMR) has moved from the $10-range last August, to about $16.50 per share this week.
“If you’ve been following my recommendation, you know that I like McMoran because it focuses on drilling deep wells, but in shallow waters of the Gulf of Mexico (GOM). Thus it can use the far cheaper jack-up rigs, versus the more expensive deepwater drill ships. McMoran is aiming for many of the same kinds of deep targets in the vast Wilcox trend, as we see in the deepwater development. That is, the water may be shallow; but there’s much the same, significant hydrocarbon potential deep down.
“Theoretically, it’s easier to get permits to drill in shallow water — even for deep drilling targets. I say ‘theoretically,’ because I’m still not convinced that the current management of the Department of Interior (DOI) is serious about supporting domestic energy production from the GOM.
“Despite my qualms about the DOI, I’m still bullish on McMoran. When things finally resolve in the GOM, McMoran will be among the strong players, moving quickly to exploit its opportunities. You may as well skate to where that particular puck is headed.”
King remains somewhat pessimistic about how the supposedly “lifted” deepwater drilling ban situation will develop under the DOI’s supervision in the near future. He explains that looking at the resumes of the DOI’s management shows that the team doesn’t appear well-versed in offshore energy development, and is primarily experienced only as regulators and investigators.
Byron King‘s keeping close tabs on the economic and political environment that are driving the future of gulf drilling. You can benefit from his thorough homework with specific investment recommendations by visiting the Agora Financial reports page and subscribing to the Energy & Scarcity Investor.
Best,
Rocky Vega,
The Daily Reckoning
[Nothing in this post should be considered personalized investment advice. Agora Financial employees do not receive any type of compensation from companies covered. Investment decisions should be made in consultation with a financial advisor and only after reviewing relevant financial statements.]
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
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