Rowan Companies - Complete Fleet Analysis As Of Jan. 20, 2016, With Commentary

| About: Rowan Companies (RDC)

Summary

Rowan has released its January FSR and I noticed a few changes: a couple of contract extensions and one new 300-day contract with BP for the Joe Douglas.

Additional contract backlog is approximately $74 million, and RDC is negotiating with Saudi Aramco for its four JUs starting in March 2016.

Also, the Gilber Rowe got a four-month extension at a reduced rate.

RDC is doing quite well all things considered: Contract backlog is showing some good signs and the company managed to secure more work. RDC should be prudently accumulated.

Click to enlarge

The drillship Rowan Renaissance; Source: Company website.

This article is an update on Rowan Companies (NYSE:RDC), with a look at its most recent fleet status and Q3 2015 results. You can find the December 2015 presentation here.

Complete Fleet Analysis as of Jan. 20, 2016

Here is the link to the fleet status from Jan. 20, 2016.

Ultra-Deepwater Drillships

# Name

Specification

K feet

Comment CC

Information

Contract

End

Current

Day rate

K$

Location

Information

1

Rowan Renaissance

2014

10/12

(Drilling 40k)

4/17

620-655

Commenced on 9/8/15

[REPSOL]

US GoM

2

Rowan Resolute

2014

10/12

(Drilling 40k)

10/17

608

[Anadarko] US GOM

3

Rowan Reliance

Q4 2014

10/12

(Drilling 40k)

2/18

602

Commenced on 2/1/15

[Cobalt]

US GOM

4

Rowan Relentless

Q2 2015

10/12

(Drilling 40k)

6/17

596

Off rate (3d)2Q'16 DP trials

[Freeport McMoRan] US GOM

Rig actually on standby at 98% of operating rate

Click to enlarge

RDC has two categories for the jackups: Premium (2) and High-Specification (3).

# Name

Contract

End

Current

Day rate

K $

Location

Indication

Off-rate

1

Rowan Gorilla IV

1986

(3)

1/16

1/16 - 11/16

70

70-75

[EnergyXXI]

[Arena]

US GOM

2

Joe Douglas

2012

(3)

4/16

4/16-6/16

8/16- 5/17

231

157

157

[BHP]

Trinidad

[BP]

0-rate

(5d) 1Q'16

(15d) 2Q'16

(30d) 3Q'16

3

Bob Keller

2005

(3)

5/24

120/178?

In discussion

[Saudi Aramco] Middle East

0-rate

1Q'16 (40d)

4

Hank Boswell

2006

(3)

8/18

163/180?

In discussion

[Saudi Aramco] Middle East

Inspection 3Q'16 (35d)

5

Scooter Yeargain

2004

(3)

11/18

163/180?

In discussion

[Saudi Aramco] Middle East

0-rate

(45d)2Q'16

6

Bob Palmer

2003

(3)

8/17

198/235?

In discussion

[Saudi Aramco] Middle East

0-rate

(45d) 2Q'16

7

Arch Rowan

1981

(2)

9/18

69

[Saudi Aramco] Middle East

0-rate (45d)1Q'16

8

Charles Rowan

1981

(2)

9/18

69

[Saudi Aramco] Middle East

0-rate

2Q'16 (21d)

9

Gilbert Rowe

1981

(2)

4/16

106 69

[Saudi Aramco] Middle East
10

Rowan Mississippi

2008

(3)

12/18

195

[Saudi Aramco] Middle East

0-rate

(35d)3Q'16

11

Rowan California

1983

(2)

9/16

144 130

day rate reduction

[Maersk]

Qatar

0-rate

(14d)2Q'16

12

Rowan Middletown

1980

(2)

9/18

69

[Saudi Aramco] Middle East

0-rate

1Q'16 (30d)

13

Rowan Norway

2011

(3)

7/16

363

[ConocoPhillips]

North Sea

(45d)3Q'16

2x1Y options

14

Rowan Viking

2011

(3)

1/16

1/16-2/17

352

360

[Lundin]

North Sea

15

Rowan Gorilla V

1998

(3)

8/16

175

[Total]

North Sea

Priced option for one well.

(30d)3Q'16

16

Rowan Gorilla VI

2000

(3)

3/18

362

[ConocoPhillips] North Sea

+2x1Y options

17

Rowan Gorilla VII

2002

(3)

12/16

181

[Apache]

North Sea

4-month option

(30d) 2Q'16 (15d) 3Q'16

18

Rowan EXL II

2011

(3)

3/17 180 [BP Trinidad] Trinidad
Click to enlarge

Cold Stacked/Retired Rigs/Recently Sold

# Name Year built Location
1 Rowan Juneau 1977 Retired
Rowan Louisiana 1975

Sold 4Q'15

2 Cecil Provine 1982

Sabine Pass Texas

3 Rowan Gorilla II 1984 Malaysia
4 Rowan Gorilla III 1984 Sabine Pass Texas
Click to enlarge

Warm Stacked/Ready Stacked/Available

# Name Year built Location
1 Ralf Coffman 2009 US GoM shipyard (30d) 1Q'16
2 Rowan Stavanger 2011 North Sea UK
3 J.P. Bussell 2008 Bahrain
4 Rowan EXL I 2010 Malaysia
5 Rowan EXL IV 2011 Malaysia
6 Rowan EXL III 2011 GoM
Click to enlarge

The backlog is estimated at $3.7 billion as of January 2016. Jackups per category and age are as follows:

Premium High-Specification Total
# of rigs 8 19 28
Age 32 8 X
Click to enlarge

Jackups by location, including the jackups going off contract before the end of 2015, are as follows:

Total Trinidad US GOM

Malta/Middle East

North Sea East Asia
Active Jackups 20 2 3 10 5 0
Available or cold stacked not retired 7 0 2 2 1 2
Total 27 2 5 12 6 3
Click to enlarge

The zero dayrate out-of-service days are as follows:

4Q15 1Q16 3Q16 3Q16
zero dayrate days 21 97 185 160
Click to enlarge

Note: This graph does note reflect the last FSR change for 2016 -- the BP (NYSE:BP) contract for $70 million that should be added to the JU for 2016/2017.

Commentary

Rowan Companies released its January FSR today, and I noticed a few changes:

1. RDC is re-negotiating four jackup dayrates with Aramco starting in March 2016:

  • Hank Boswell
  • Bob Keller
  • Scooter Yeargain
  • Bob Palmer

The company indicated that the dayrates will probably be lower than initially expected. The three others are not affected:

  • Arch Rowan
  • Charles Rowan
  • Rowan Middletown

The Gilbert Rowe was awarded a four-month extension at a reduced rate from $106k/d to $69k/d -- an additional backlog of $8 million.

2. The Rowan California has experienced a dayrate cut, mutually agreed with Maersk, from $144k/d to now $130k/d until September 2016. Loss backlog of $4 million.

3. The Rowan EXL IV is now available.

4. The Ralph Coffman is in the shipyard for 30 days and is still available in the GoM.

5. The Rowan EXL III is available in the GoM.

6. The Joe Douglas got awarded a four-month extension with BHP in Trinidad until June 2016, and got awarded a 300-day contract with BP in Trinidad starting Aug. 1, 2016, at $157k/d. There is a contract backlog of about $70 million.

7. The Rowan Louisiana was sold in Q4 2015.

8. The Rowan Relentless contracted by Freeport-McMoRan (NYSE:FCX) is now on on standby, at 98% of the operating rate. They're probably waiting for renegotiation with the company, which has indicated the desire to sell its entire oil and gas portfolio. The total additional backlog for this FSR is approximately $74 million.

I recently commented on Rowan and what to expect in 2016. The situation for the oil industry has deteriorated further, since early January, and it's really difficult to get a clue about what will happen in 2016 in the offshore drilling industry, which is under tremendous pressure currently. However, when we look at the FSR we can conclude that RDC is showing strength and will be more likely able to weather this unprecedented bear cycle, whereas many other offshore drillers might not avoid a restructuring.

Of course, the price of oil is of paramount importance. If you believe that this situation is temporary and will turn positive before the end of 2016, then RDC should be a good choice to accumulate now as it seems oversold.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in RDC over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am trading RDC