wolneyyy
Long

A Lovely Time To Long This Macro Gem

TPL/PKD  
TPL/PKD  
So this spread's logic comes from the recent ISM report where real estate (leasing) conditions are expected to remain strong, while capital investment in deep-water drilling falls off a ledge. This spread pits a beautiful land play with crude exposure - TPL - against a weak, weak drilling company with exposure to the deep-water drilling arena - PKD . After today's massive sell off in this spread due to geopolitical risks surrounding crude and the perceived leverage that PKD has to crude prices, this is the perfect time to buy. Also, this sell off mirrors the one that happened recently that was followed by strong buying. I'm going to be long here tomorrow morning. My stop is @ 203, and my target remains about 50% up from where we currently are. Lots of alpha to be found here.

Trade Well,

Andrew
thank you for the commentary - always appreciated. I was under the impression that they had some deepwater exposure but that may have been the floating capabilities you mentioned. That said, My original pick to short against TPL was Ensco, no doubt, but I didn't like the technicals and found PKD which had recently split 15/1. I couldn't resist the brutally bad techs and thought I'd found some deepwater justification. Either way the trade has paid me HANDSOMELY since then so I'm not complaining.

Thanks for the comments tho
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Although quite weak and over leveraged, Parker Drilling is not a deep water drilling company. They have land rigs in Alaska and Internationally as well as barge rigs that work inland in Louisiana. In my mind, Parker will recover before the deepwater rig companies such as Transocean and Ensco. Parker's rig utilizations are rising each month. The question is more will their rig utilization grow in time to give the banks a glimmer of hope to refinance their long term debt in 2020 and 2022.
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@damc, I should have mentioned, they also own a decent size rental tool business that operates stateside and internationally that is quite healthy.
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