Very good post @nirvana_laha
- Given that this is a rental business of sorts, what has caused the extreme volatility in earnings over the last decade? Ex of covid, margins have varied -40% to +38%.
I would have assumed a more gradual change in margins as old contracts run-off and new ones come with market pricing prevalent.
In this context, in what scenarios can we see margins collapsing? (given that pricing is fixed for 2-3 years)
- How should one think of economics of rigs if one had to put up fresh capex? if I spend $100mn in putting up a rig, what kind of ROIC/IRR should I build in and how? @Deepesh_Punetha has touched up on it, but would be good to double click.
- What is your sense of the use of the large cashflows? Will they return or are there relevant reinvestment opportunities?
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