6 Super Cheap Oil Drilling Stocks

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Includes: ATW, DO, ESV, NE, RIG, VTG
by: Hawkinvest
A recent article at the thestreet.com discusses "oil drilling stocks at bargain prices." I agree that the drillers have become very cheap, partially due to the aftershocks and regulations from the BP oil spill and from the rapidly declining markets due to the debt ceiling debate. Oil and drilling will go on no matter what happens to the economy or in Washington. For long term investors, it looks like the oil drillers are giving us a great buying opportunity. Some of these stocks are even trading below book value. Here are a few with strong potential for share price appreciation.
Vantage Drilling Company (NYSEMKT:VTG) offers offshore contract drilling services to oil and natural gas companies. The Vantage fleet includes four ultra-premium jackup rigs, three ultra-deepwater drillships, and two deepwater semi-submersibles. This is a small company compared to many other drillers and is relatively new. The debt load seems to weigh on these shares and hold back profits. If the stock drops from these levels, it could be an interesting speculation.
Here are some key points for VTG:
  • Current share price: $1.63.
  • The 52-week range is $1.04 to $2.26.
  • Earnings estimates for 2011: A loss of 10 cents per share.
  • Earnings estimates for 2012: A profit of 2 cents per share.
  • Book value: $2.60 per share.
Diamond Offshore (NYSE:DO) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of about 47 offshore rigs. This stock is trading at about 11 times earnings and has dropped from a recent high of about $71. Any dips to $65 or below looks like a solid buying opportunity.
Here are some key points for DO:
  • Current share price: $67.83.
  • The 52-week range is $57.76 to $81.19
  • Earnings estimates for 2011: $6.27 per share.
  • Earnings estimates for 2012: $5.14 per share.
  • Annual dividend: 50 cents per share which yields 0.7%.
  • Book value: $29.78 per share.
Transocean (NYSE:RIG) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of about 138 mobile offshore rigs that it either owns or operates. This company is still dealing with legal issues and liability from the BP oil spill. The spill has created major expenses and negative media reports for any company directly or indirectly involved. This stock is one of the cheapest in this sector and is trading below book value due to the ongoing BP spill concerns.
Here are some key points for RIG:
  • Current share price: $61.56.
  • The 52-week range is $45.41 to $85.98.
  • Earnings estimates for 2011: $4.01 per share.
  • Earnings estimates for 2012: $6.18 per share.
  • Annual dividend: 90 cents per share, which yields 1.5%.
  • Book value: $67.94 per share.
Noble Corporation (NYSE:NE) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet comprised with about 14 semi-submersibles, 12 drillships, 45 jackups, and two submersibles. This stock traded around $40 just weeks ago and has been in a downtrend ever since. Still, the stock is not as cheap compared to others here based on weak earnings for 2011.
Here are some key points for NE:
  • Current share price: $36.87.
  • The 52-week range is $30.23 to $46.72.
  • Earnings estimates for 2011: $1.75 per share.
  • Earnings estimates for 2012: $3.85 per share.
  • Annual dividend: None.
  • Book value: $28.73 per share.
Ensco PLC (NYSE:ESV) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of 42 jackup rigs, four ultra-deepwater semi-submersible rigs, and a barge rig. This stock looks like a solid value now and even more so on any dips. It pays a strong dividend with a yield of 2.6%, and trades for just about 8.5 times 2012 earnings.
Here are some key points for ESV:
  • Current share price: $53.25.
  • The 52-week range is $40.22 to $60.31.
  • Earnings estimates for 2011: $3.71 per share.
  • Earnings estimates for 2012: $5.96 per share.
  • Annual dividend: $1.40 per share which yields 2.6%.
  • Book value: $41.73 per share.
Atwood Oceanics (NYSE:ATW) is a major offshore oil and gas drilling contractor that operates worldwide with a fleet of semi-submersible rigs, semi-submersible tender assist rigs, jack-up drilling rigs, and submersible drilling rigs. This stock traded for about $40 in June and has surged up to about $48, if it heads closer to $40 again, it looks super cheap for long term investors.
Here are some key points for ATW:
  • Current share price: $46.70.
  • The 52-week range is $23.75 to $48.84.
  • Earnings estimates for 2011: $3.95 per share.
  • Earnings estimates for 2012: $4.13 per share.
  • Annual dividend: None.
  • Book value: $23.16 per share.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.