Finding solid ground in today's energy markets continues to vex even the most experienced energy minds, as new supplies courtesy of shale oil and gas and a number of political uncertainties literally help to re-write the oil exploration playbook. But there is no denying the palpable uptick in sentiment ending last week and into this week, premised on:

• Brent rising above $39 for first time this year
• Talk turning to a new oil price equilibrium of $50 per barrel
• Hope emerging that a China slowdown has been overstated.
  

Trickier still is predicting future direction of the offshore floating production business, a high-risk, high-reward niche which generally requires a price per barrel north of $65 to keep it solvent. Even in a subdued price oil environment, these world regions still hold prospects for the floating production business.

• Brazil has pre-salt discoveries that are supposedly viable at $40+ oil. The biggest issue in Brazil right now is the lingering financial cloud over Petrobras.
• The Gulf of Mexico: The U.S. side continues to attract investment in deepwater reservoir development, the Mexican side awaits investment from international oil companies.
• While the North Sea is mature and demands higher pricing, the Norwegians in particular are dependent on the revenue stream, and historically are most efficient at maximizing production per well.

When the floating production market does inevitably rebound, players in this sector should find much more favorable prices at some of the world’s leading shipyards, as floating production system prices have adjusted downward dramatically – in some cases 20% or more – in step with declining oil prices

Hot Stock to Watch: SEADRILL
Shares in Norwegian rig firm Seadrill have risen 8 days in a row; shooting  up a third (38.83 crowns) on Monday, March 7. Shares in Seadrill have nearly tripled since the company presented its fourth-quarter results on Feb. 25.  While the past week is encouraging, it’s important to remember that shares in Seadrill are down more than 80 percent since the start of 2014, according to Reuters.

(image Courtesy of SeaDrill)