Move aimed at cashing in on shortage of drilling rigs.
Great Offshore Ltd (GOL), the Mumbai-based integrated offshore oilfield services company, has made an offer to purchase a controlling stake in an unnamed overseas company. The deal size, according to industry sources, is expected to be over $500 million (around Rs 2,000 crore).
The overseas company will own two semi-submersible drilling rigs (upon delivery) that are estimated to cost around $1.40 billion. At present, the sixth generation rigs are under construction, GOL informed the BSE today.
The transaction is subject to completion of due diligence and approvals both in India and overseas. Motilal Oswal Investment Advisors was the advisor and Luthra & Luthra the legal advisor for the transaction.
According to industry sources, GOL was looking at acquiring oil rigs and stakes in oil rig companies for sometime. Oil and gas exploration and production companies such as Reliance Industries and ONGC are facing a shortage of drilling rigs and rig construction yards are overbooked till 2011. GOL is looking at supplying rigs to these firms.
The company was in advanced talks to acquire two Norwegian companies — Scorpion Offshore and Petrojack — for around $500-550 million, and had appointed Motilal Oswal as consultants. However, the name of the acquired company could not be ascertained.
When contacted GOL and Motilal Oswal executives declined to comment on the deal, stating that only an offer has been made, and the deal was yet to be signed.
Earlier on January 3, 2008, GOL took delivery of a flat cargo carrier, increasing the total number of its fleet to 41 vessels.
Great Offshore was formed by a demerger of Great Eastern Shipping Company’s offshore business. Other leading rig services companies in the country include Aban Loyd, Greatship India (a subsidiary of GE Shipping), Mercator Lines and Jindal Offshore.
The company’s stock prices rose 1.28 per cent on Tuesday to close at Rs 1,093.50, compared with the previous day’s close of Rs 1,079.70 per share.
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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