Robotti & Company Presentation - 2014 FFH Shareholders Dinner

[Parsad]

Here is Bob's presentation from our dinner that unfortunately was not available that evening.  Cheers!

 

Robotti_Presentation_-_2014_Fairfax_Financial_Shareholders_Dinner.pdf

[phil_Buffett]

thanks sanjeev  :).

 

they talk about the stock Subsea. which is the last year really big down. has someone a stake in it?

[Aberhound]

I just looked at Subsea7 and it is still trading at lows. The question is will ROE return from around 10 since 2011 (and lower last year due to the Brazil cost overruns) nearer to the former 40%?

 

The improvement in detecting below salt fields came suddenly due to the improvement in computers and viewing techniques. As a result many big finds were found like Brazil. These deep fields will be challenging due to the high temperatures and pressures. Bottom of the sea production vs. platforms seems safer as climate variability increases. I suspect the only way to safely produce at high pressures is high production rates to reduce stresses on the equipment. The two factors of many big finds and high production rates may cause lower oil prices due to temporary gluts every time a new big field comes online with monster production. You will need monster production to pay for the massive expense. This should mean high prices for the servicing companies due to the high risk and the time it takes to increase resources to meet the new demand. If I was an oil company I would race to get the big fields into production before there are shortages and a lower oil price.

 

I conclude that servicing companies are a better bet than producers the same as we saw in NA natural gas.

 

The main counter argument is that only the biggest oil companies will have the ability to take on these big risky projects. Exxon is likely a fierce negotiator.

[jouni1]

has anybody looked at subsea? i kind of like it, but they're buying ships from the ceo's investment company(also the biggest owner @ subsea7) hand over fist. are they good deals or not? i felt it was weird it wasn't mentioned in the analysis at all. shoved it in the no-pile, but it keeps calling me.

[Liberty]

Looks like SUBC is down about 40% since it was presented at the diner.

 

Have no opinion on it either way, was just noticing this now while looking through a pile of PDFs which contained this presentation.