The Skewed Path

@TommyDeepwater Which rigs do you think are the most likely/capable to be contracted for this project?

Eni and Petronas took FID this week on their Kutei Basin rich gas development in Indonesia. The JV, to be named 'Searah,' will be self-funding, investment grade and dividend-paying $E Project utilizes existing gas infrastructure w/ exploration upside. Good floating rig demand 🇮🇩

Energy equities often trade as if today’s high prices are temporary. But historically, when curves look like this during structural underinvestment, prices often stay higher than expected. The curve embeds three big assumptions: 1. Supply will normalize U.S. shale growth, OPEC supply, and new projects will bring supply back. 2. Demand growth slows Energy transition / slower global growth. 3. Current tightness is temporary Geopolitics, inventory draws, etc. If any of those assumptions are wrong, the curve reprices violently upward.

I think $ABX earnings could be very strong today. Abacus Global Management may be one of the market’s most overlooked growth stories. I recently broke down the thesis in detail on Seeking Alpha. seekingalpha.com/article/487941…

@jakebrowatzke Try asking the Hims crowd about short interest😂

$PATH SHORTS WILL LOSE TO REALITY! IT'S ONLY A MATTER OF TIME.

@TommyDeepwater Thoughts about Noble acquiring SDRL to create a real duopoly?

Left at the altar by $RIG, which instead acquired $VAL, $SDRL must chart its own course. High-spec scale isn't their game. Instead, harvesting 7G cash flows, deploying balance sheet into cash-generative rigs and forcing the valuation higher through reliable buybacks is the path. (1) With seven 7G drillships, Seadrill has a capable fleet, and the priority should be maximizing cash flows from those assets rather than continuous capex upgrades chasing highest-spec status. Seadrill's heavy UDW focus also leaves it disproportionately exposed if the drillship market softens. Building modest scale through cash-generative assets selectively can diversify the earnings base in a cyclical industry without stretching the balance sheet. (2) Seadrill's cash flows have lagged peers in 2024-2025. One-offs played a role, but scale was also a factor. Seadrill's 2025 free cash flow was suppressed by a non-recurring $43mm litigation payment in 4Q and contract preparation costs for 3 drillships commencing work in 2Q26. Seadrill's ~$100mm SG&A burden is difficult to absorb across a smaller fleet, compounding the drag from below-market legacy 7G contracts that were earning just $245-260k/day through most of 2024-2025. Jupiter and Tellus have been repriced for 2026+; Carina remains uncontracted. Since 2023, Seadrill hasn't generated sufficient organic cash flow to fund buybacks — 2024 repurchases were financed by a well-timed jackup sale and drawing down cash reserves. (3) Seadrill trades at a lower valuation than Transocean and Odfjell, partly because its fleet doesn’t yield as high of dayrates but their drillship fleet is certainly competitive. Rather than spend discretionary capex on high-spec upgrades, the focus should be on free cash flow efficiency and consistent shareholder returns. (4) SED Energy Future Holdings (EFH): An admittedly contrarian M&A idea given SDRL’s ‘23 exit from tender rigs via the sale of T-15, T-16 and Vencedor, but EFH's six fully-utilized Southeast Asia (a region SDRL likes) assets generating steady cash flow may be exactly what SDRL needs more of. These tender assist rigs are unglamorous assets, but that's the point. SFL's Hercules has secured a 400-day contract in Canada starting 1Q27 at ~$400k/day. Should $SFL sell, Odfjell is a natural buyer given its management role. Seadrill's active $37mm legal dispute with SFL on Hercules makes SDRL quite unlikely. (5) Other potential targets include $NOL.OL Northern Ocean's Deepsea Mira semisub, although a higher valuation rig. Ventura Offshore's SSV Catarina — a 6G semi in Indonesia — is interesting, as is acquiring Ventura outright. With the Transocean bid off the table, revisiting jackups makes more sense than before. Longer-dated, a UK windfall tax repeal could eventually revive Seadrill's coldstacked Norwegian semisub(s), though that remains years away. Seadrill’s net leverage is below 1.0x so it has balance sheet capacity.

@AbacusGM @SeekingAlpha Thanks for sharing

@SeekingAlpha: "Abacus Global Management $ABX: One Of The Market's Most Overlooked Growth Stories" | Analyst: @TheSkewedPath "For investors willing to explore the nuances involved in an unconventional asset class, the thesis proposed here is straightforward. Abacus is growing faster and developing more recurring revenue streams than the market currently recognizes. Combined with accelerating fundamentals, deeply aligned management incentives through substantial insider ownership, and a valuation that prices in virtually no growth, Abacus Global Management stands out as one of the most compelling opportunities in the market today—and I therefore rate it a strong buy." Read the full thesis below: seekingalpha.com/article/487941…

@TommyDeepwater After they sold two of their ships to TPAO I have expected that they would also sell their last one and call it a day

$DVD.OL Eldorado to acquire 7G drillship Deep Value Driller for $300mm via an eleventh-hour, unsolicited offer 👀 Saipem and DVD agreed on a $272.5mm purchase price on Feb 17 — below Saipem's $300mm option, and in my view, a missed opportunity Saipem's loss is Eldorado's gain

@SFarringtonBKC Looks like somebody got a cake😄

What I'm Buying This Week 2/21/2026 (Paywalled Video)

@TommyDeepwater Do you now think that all the consolidation is done? Or would you expect one more big merger?

$RIG $VAL ❤️ RIG finally found a good use of its share currency w/ the VAL merger. They accelerate deleveraging, pulling forward shareholder returns, and gain $150-$200mm of synergies. The industry's most disciplined driller absorbs a less disciplined player—positive for dayrates (1) The all-stock structure solves RIG's balance sheet problem by absorbing VAL's low-leverage balance sheet (~1x Net Leverage), accelerating Transocean's deleveraging to ~2x by year-end 2027. This positions RIG to refinance its debt stack after the 2H26 closing into a more equity-friendly capital structure with reduced amortization and restricted cash requirements. Seadrill had been rumored as an alternative, but outstanding lawsuits (Eldorado, SFL) complicate M&A. (2) Recent Transocean share outperformance made this deal possible. Transocean's stock gained sufficient currency value to acquire Valaris in an accretive manner—an option unavailable just months ago when its shares traded at weaker levels relative to Valaris. I believe Valaris shareholders should be happy with RIG shares – they get premium assets without having to invest >$200mm for an 8G drillship upgrade to an existing 7G. Instead, they get 47% of RIG’s Titan and Atlas without any capex, plus the very promising cash flow, along with all 7 of RIG’s Norway semisubs. (3) The oil market has fundamentally shifted since the drillship ordering boom of 2011-2014. Today's majors prioritize capital discipline and dividend growth, with capex down over a third the last dozen years. While technology has driven efficiency gains, this capital discipline has also shortened reserve lives as companies favor lower-cost brownfield projects over major greenfield hubs—raising concerns about global decline rates, per the IEA's September 2025 report. (4) Lower capex spending reflects both efficiency gains and a fundamental shift in how investors value oil majors—prioritizing dividend growth. This capital discipline has suppressed rig demand. With Brent languishing in the $60s and 7G dayrates declining from ~$490k in late 2023 to ~$400k today, the industry needed efficiency gains. The proposed merger targets $200mm in synergies (Noble achieved ~$100mm within a year from Diamond Offshore, so it's plausible). Dayrates have material upside if/when majors prioritize proven reserve life growth. (5) What to expect on Dayrates and Timing after the RIG/VAL merger: It still needs to close -- expected in late 2026. I believe due to the mobility of drillships, regulatory hurdles can be overcome. Dayrates don’t go up immediately, but all else equal, the combination is positive for their future trajectory. Brent below $70/bbl means customers will remain budget cautious, although into 2027-2028, improving demand (subject to oil prices) and industry consolidation may finally deliver recurring pricing power w/ no newbuild supply.

@TommyDeepwater What’s your opinion on the two semis Valaris owns? They seem to struggle to get a new contract and are not HE Scrap candidates?

Key aspect of $RIG $VAL merger is RIG would control an additional 3 coldstacked 7G drillships post close The coldstacked 7G supply overhang is resolving after TPAO's July 2025 purchases and now RIG is likely to be price disciplined on remaining sideline capacity DS-13 and DS-14 are likely to eventually enter the market as 'stranded newbuild' purchases made in December 2023. My opinion -- Valaris appeared intent on eventually reactivating DS-11; Transocean is likely more disciplined on that decision. The three cold-stacked Ocean Rig 7Gs—Mylos, Athena and Apollo, last worked 2016-2017—appear unlikely to re-enter the but have long-term option value

My Venezuela experience as head of trading in the region for Cargill. Cargill was/is the leading producer of critical staple ingredients such as flour, pasta, vegetable oil, and rice in VZ. I am not saying I agree with grabbing the dictator, but I did have a front row seat to the damage a kleptocracy did to innocent people. 1. The government took over our "minute rice" facility at gunpoint because we were "gouging" the nation's poor. The government was never able to run the plant. It never ran again. It was returned years later with no equipment inside 2. There are 1000's of generals in the army. They are each given a slice of the economy to loot. The large number of generals made it difficult to organize a coup against the regime. 3. The government opened grocery stores and sold staples below the cost we sold them to the government. In theory they used petro oil money to lower grocery prices. Our regular grocery outlets were forced out of business. When the government demanded we sell them products below cost we simply had to shut down. The populous became ever more dependent on the government handouts. (PS this is the mayor of New York City's proposal. 4. Dollars- We needed dollars to go buy raw materials like wheat from places like the US and Canada. The government would periodically allocate us some dollars that could only be spent for raw materials and freight. Eventually only the local companies that can and would pay bribes got dollar allocations. We had several facilities closed for lack of raw material 5. My employees liked working for Cargill. The office was an armed compound with access to a gym, high speed internet, global communications, and a weekly box of basic staples. Cargill provided a safe and secure environment if only for the working hours. 6. Employees became very close to others inside the apartment building. Going out on the street with a desperate population was not advisable. 7. I needed wood pallets for feed. We tried to export wood pallets to swap for grain. We refused to pay the bribes it would take to export the pallets 8. I once tried to set up a closed loop wheat planting to flour mill supply chain. A. They came and stole all the seed wheat for food. When we tried to ship in seed wheat in containers via US donors there was no way to get it out of the port without it being stolen 9. Livestock- Our feed business completely collapsed. Even if you could raise a pig, you couldn't defend it from being stolen. People with guns were hungry. 10. Employees- In the end my highly skilled team alone with other highly educated people chose to leave. Cargill often found jobs for them in other Latin countries. The regime was more than happy to see the well-educated leave the country. Setting these employees up with high quality stable jobs after fleeing remains one of the best things I ever did in my career. No one remembers millions in trading earnings. This is a short list. In my opinion the first money spent needs to happen now and it needs to be food. The US is already on the clock. The current regime does not care if it starves the population. The orgy of theft will actually accelerate if they believe their days are numbered. VZ should be an outstanding customer of US grown ag products. Rice, bread wheat, veg oil ect. Feed the people first. Jeff Kazin Former head trading Cargill

My mom: "Don't get drunk and talk about shipping and offshore at Christmas dinner." Me after one sip of akkevitt:

@SFarringtonBKC @BowTiedMara I didn’t expected to read this😂

@BowTiedMara They should go back to reading Twilight. They don't really expect me to be a vampire, but they might really expect me to be good at f**king

Men viewing podcasts with Milei, women watching p0rn. Wild times

@WhoPaysWins @SFarringtonBKC does have the best coverage you can find on ABL on his substack including management interviews

I see a fair amount of positive spin for $ABL recently, but after spending just an hour looking at it, I can A LOT of red flags. Non-cash revenue recognition and recognition of non-cash unrealized gains from lowering its discount rate are really sketchy, yikes.

" I ran $15 billion at Fidelity Magellan and the single biggest lesson I can give you is this: the price you pay is the only thing that determines whether you make money or lose money over time. Everything else is noise. I have seen people buy the greatest companies in the world—Coca-Cola, Disney, Gillette—at 50, 60, 70 times earnings because they were convinced the growth would never end. When the growth slowed even a little, the stocks got destroyed. Quality didn’t save them. The price killed them. I have also bought companies that were absolute dogs—companies losing money, companies in dying industries, companies nobody wanted—and made 10 or 20 times my money because I paid so little that the only direction was up. The margin of safety was in the price, not the story. There is no such thing as a good stock at any price. There is only a good price for a stock. Pay too much and you lose. Pay little enough and you can be wrong about almost everything and still win. I made 29 times my money in La Quinta Inns, a company nobody ever heard of. I made 20 times in Philip Morris when it was the most hated stock in America. I did not need a crystal ball. I needed a low price. That’s been true since 1920 and it will be true in 2120. The price you pay is the only margin of safety you ever get." - Peter Lynch

@TommyDeepwater What do you think is Nobles incentive behind selling those assets? I didn’t view them as a probable candidate to drive further consolidation via M&A so far

$BORR followed through on its signaled M&A plans, buying five $NE jackups for $360mm, while Noble sold a 6th unit separately for total proceeds of $424mm. The transaction reinforces Borr’s jackup focus while NE leans further into deepwater and gains $250-260mm of cash optionality (1) Noble sold six jackup rigs for a total of $424mm: three JU-3000N units at an implied ~$77mm each and three CJ50 rigs at roughly $64mm each (based on the sale to Ocean Oilfield Drilling). For comparison, Seadrill sold three JU-3000N jackups in July 2024 for $113mm per rig. With the jackup market softening since then, Noble’s pricing is roughly 30% below the Seadrill transaction near the peak of the jackup cycle in 2024, although appears adequate today. (2) Although Noble has sold seven jackups over the past year, it still retains its five CJ70 units — a high-spec, heavy-duty jackup class concentrated in the UK–Norway North Sea. Their marketability has been held back by adverse UK oil and gas policies, but if UK tax and permitting policies improve, the CJ70s offer meaningful upside for Noble longer-term. (3) Noble will receive a $150mm, 6-year note from Borr secured by three JU-3000N jackups, effectively making Noble a secured HY lender. While terms weren’t disclosed, the coupon likely needs to be around ~11% to reflect market pricing; anything lower would imply Noble is subsidizing the asset value relative to Borr’s secured credit market pricing. It raises the question if NE could eventually sell these notes down to private credit investors to raise cash if priced attractively. (4) Of the five rigs acquired by Borr, as of Noble’s October Fleet Status report, three have meaningful availability in 2026. To mitigate credit concerns regarding the debt used to acquire the rigs, Borr is issuing $85mm of equity to support its liquidity, after raising $100mm in July 25. The acquired jackup rigs are consistent with Borr’s strong fleet quality. (5) Saudi Aramco’s 2024 rig suspensions cut jackup dayrates by 30–35%, but as rigs are gradually being added back, the jackup bear case has materially diminished. Although Borr’s public bonds don’t benefit from the new JU-3000N as collateral—that remains with Noble—credit investors constructive on risk and oil prices may view BORRNO’s 525–600 bps spreads as attractive relative value, especially given improving Aramco demand and ADES’s acquisition of Shelf Drilling’s older JU fleet in 2025 providing a relevant market benchmark.

$OIH $RIG $ODL.OL $NOL.OL $VAL $NE $SDRL I believe @BULLReturns is correct - and actually obviously so. It always seems this way at / after heavy cyclical lows. The question to ask yourself is what stock prices / market caps will these companies be trading at in an environment that forces newbuild drilling rig orders? I have no idea on timing. But bookmark it - it's coming. It literally HAS to: the current - heavily rationalised & always depreciating / aging - fleet won't be enough for likely decades of rising oil consumption. Consider the huge narrative change that has already happened in the background: from 2019 will be peak oil demand, to actually by 2030 to the recently revised IEA outlook that says oil demand won't peak until 2050. These are the predictable steps along route to: "oh sh*t, we're going to need to build more floating drilling rigs."

@100xCompounding @GP_stonks Great overview I only have Deep Value Driller on my sheet that’s missing with 1 vessel

$TDW $RIG $VAL $NE $SDRL Updated* For TPAOs 6 vessels they dont really compete with the rest of the 3rd party charter vessels given these are all working for the needs of the state Thank you @GP_stonks for the reminder on TPAO/El Dorado