But the rebalancing triggered by the price collapse has yet to run its course. Over the past couple of months, Brent futures have been trading around $60/bbl. (Source: Seadrill's Investor Presentation) Generally speaking, however, most CEOs of the oil majors consider a range of break-even oil prices when deciding what projects to pursue, from about $40 to $120/bbl. Most of the offshore drillers need oil prices to be at least $50-$55 to be competitive. The above chart also represents a starting point for extrapolating - or attempting to figure out where some of these companies may trade at within the next 12-18 months in other words, the future price of oil is the most important factor to consider when determining where these stocks are likely to trade 12 to 18 months from now. Stock Prices at Various Brent Crude Oil Prices Keep in mind, though, that the fall happened very quickly and that for some of the equity price ranges below there were only a few days when Brent Crude Oil was trading at that price point (i.e., there was a small sample size). The chart below shows the approximate ranges that these stocks traded at when Brent Crude Oil prices were between $50 and $100 a barrel. Note: June 19th represents the pre-crash price and the afternoon of March 25th represents the current price. As a result, most major offshore drilling companies have fallen by more than 50%. The offshore drilling sector was hit by a perfect storm last year: oil prices plummeted, an abundance of newbuild drilling rigs hit the market, and oil majors began reducing capex. And that at these price levels some energy companies are now fairly compelling investment opportunities. Still, I feel that there are some excellent companies in the energy sector such as Noble Corporation ( NYSE: NE) that have been badly beaten down. But after mulling over the data I concede that this cycle is different from those that we have seen in the past.

Admittedly, at first I thought that we would see a sharp spike from the 50's to the 70's and then a slow recovery to the 80's or 90's where oil would stabilize. Once the price of oil slid below $60/barrel, I began to take a very close look at the energy sector after all, it felt like the market overreacted and the price of oil went down too far too fast.

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