Atwood Oceanics - Complete Fleet Status And Analysis As Of July 27, 2016

| About: Atwood Oceanics (ATW)

Summary

ATW released its last fleet status on July 27, 2016. Two new contracts bring the total backlog to $890 million starting August 2016.

The Atwood Osprey secured a 20-22 month contract in 2018 at a day rate of $190K/d down from $450k/d.

ATW is still trading above $10 and I recommend to take some profit off the table, assuming a re-test of the $8 support soon.

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Source: Atwood Advantage - ATW website

This article is an update of my preceding article on Atwood Oceanics (NYSE:ATW) published on May 3, 2016.

Complete fleet status as of July 27, 2016:

1. UDW - UltraDeepwater Drillships and SemiSubmersibles.

# Name

Year

built

Specification

K feet

Contract

End

Current

Day Rate

K$

Location
1 Atwood Achiever 8/2014 12*40

11/18

495.5

Stanby starting 6/16 (95%)

[Kosmos Energy] Mauritania/Senegal

2 Atwood Archer

8/2017

12*40 Available

Delivery of rig delayed up to 6/30/2018 at ATW option

3 Atwood Admiral

3/2016

12*40 Available

Delivery of rig delayed up to 9/30/2017 at ATW option

4 Atwood Advantage 2013 12*40

mid 9/16

mid 9/16-mid 11/16

mid 11/16 - 12/16

12/16-8/17

240

581

240

581

[Noble Energy]

US Gulf of Mexico

5 Atwood Condor 2012 Semi-Sub 10*40

mid 8/16

mid 8/16-11/16

543.9

555

[Shell Offshore]

US Gulf of Mexico

6 Atwood Osprey

2011

Semi-Sub

8.2*32

12/16

1/17-2/17

2/17-4/17

4/17-12/17

1/18-9/19

450

Available

185 (min. 45-days)

Available

190

[Woodside]

[ConocoPhilips]

Australia

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2. Old Semi-submersibles.

# Name

Year

built

Specification

K feet

Contract

End

Current

Day Rate

Location
1 Atwood Eagle 1982 5*25 Available Singapore
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3. Jackups and Others

# Name

Year

built

Specification

Contract

End

Current

Day Rate

Location
1 Atwood Aurora 2008 350'*30k 9/16 185 [Addax Petroleum] Cameroon
2 Atwood Beacon 2003 400'*36k

Early 8/16

91.5

[Rockhopper Exploration]

Italy

3 Atwood Mako 2012 400'*30k Available

Philippines

4 Atwood Manta 2012 400'*30k Available Philippines
5 Atwood Orca 2013 400'*30k

10/16

85

[Mubadala Petroleum] Thailand
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Backlog

The contract revenue backlog is currently $890 million as of July 27, 2016 (estimated by Fun Trading), with 34% of available days contracted for fiscal 2016 remaining.

ATW 7/27/2016 2016 2017 2018 2019 2020 day rate
Atwood Achiever 5 12 11 0 0 495,5~
Atwood Archer 0 0 0 0 0 0
Atwood Admiral 0 0 0 0 0 0
Atwood Advantage 5 8 0 0 0 496
Total Drillship 10 20 11 0 0
Atwood Condor 4 0 0 0 0 551
Atwood Osprey 5 1,5 12 9 0 237~
Atwood Eagle 0 0 0 0 0 0
Total SemiSub 9 1,5 12 9 0
Atwood Aurora 2 0 0 0 0 185
Atwood Beacon 0,15 0 0 0 0 91,5
Atwood Mako 0 0 0 0 0 0
Atwood Manta 0 0 0 0 0 0
Atwood Orca 3 0 0 0 0 85
Total Jackups 5,15 0 0 0 0
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Commentary:

Atwood Oceanics released its fleet status report on July 27, 2016. A few changes have been indicated:

1 - The Atwood Achiever will experience a "standby" time paid at 95% of the current operating day rate, starting June 2016 for unknown period.

2 - The Atwood Archer and the Atwood Admiral will be delivered at ATW option on 6/30/2018 and 9/30/2017 respectively. This is not new but the mention "letter of exclusive negotiation in Brazil for a new contract" is now deleted due to the lack of progress. However, we should not discount this potential yet.

As a reminder, Atwood indicated,

Has received a letter confirming that it has been chosen to enter exclusive negotiations with an undisclosed operator to conclude agreement on a drilling program offshore Brazil commencing in the third quarter of 2017. The letter specifies that either the Atwood Admiral or Atwood Archer, ultra-deepwater drillships currently under construction at the Daewoo Shipbuilding & Marine Engineering Co., Ltd yard in South Korea, would be contracted to drill the program. The letter specifies a number of contractual items that have been agreed by the parties, including the commercial rates, well count, minimum term length, and rig acceptance criteria.

3 - The Atwood Advantage will have a total standby of 120-day total at $240k/d instead of the $581k/d (see table above.)

4 - The Atwood Condor will have also a standby period at 95% until 8/17.

5 - The SemiSubmersible Atwood Osprey is working for Woodside until 12/16 at $450k/d. The company got 1-well for the rig (minimum 45-day) until mid 2/17 for ConocoPhilips in Australia at $185k/d. Then, after an actual of availability until 12/16, the rig will commence a 20-22 month contract with Woodside again at $190k/d until September 2019.

6 - The JU Atwood Beacon has rolled off contract with ENI in Italy and will commence a 1-well contract with Rockhopper Exploration in Italy at $91.5k/d, early August 2016 for about 30-45-day.

Note: The previous day rate was about $130k/d With ENI.

Conclusion:

The market is entering an extremely difficult phase considered as a triple whammy.

First, the tendering activity has almost vanished due to low oil prices which are still trading under the "sweet spot" of the $55 per barrel.

Second, the offshore drilling industry is crawling under the weight of an unprecedented rig oversupply.

Third, dayrates have been crushed, and are now barely covering the break even point.

These three reasons above, are of course very concerning for the survival of Atwood Oceanics. ATW has a net debt of $1.61 billion and two new UDW potentially delivered in 2017-2018 without a contract, so far.

A quick look at the balance sheet (last quarter only) is perhaps important here:

Atwood Q1 2015 Results - February 2, 2016

Q1 2016 Q4 2015
Revenue in $ Million 307.819 363.18
Net Income $ Million 39.081 150.69
Earnings per share in $ 0.60 2.32
Adjusted Earnings in $ (1 time gain/costs) 1.32 -
Operating income $ Million 46.076 178.63
Shares Outstanding basic in Million 64.765 64.654
Cash and Cash equivalent in $ Million 115.669 113.98
Long-term Net Debt $ Billion 1.6084 1.686
Drilling cost in $ Million 139 127
Capital expenditure $ Million 131.547 448.02/1Y
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Commentary about the stock future direction:

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ATW has experienced an excellent run since early February, and basically doubled and reached $14 early July. It was a surprise, and I did not believe the stock would have sufficient momentum to reach $10 in March when I sold out, but it did, against my thinking.

When ATW reached $14, early July, I seriously considered shorting the stock which was overbought, in my opinion, and overvalued without a long-term contract in Brazil.

What kept me from shorting was the potential contract for the Atwood Admiral/Atwood Archer which is still up in the air.

The stock is now just above $10 again, and technically has breached the two moving averages (MA50-MA200), which is not a good sign, and may indicate a re-test of $8+ support soon. However, as we all know, oil prices are of a paramount importance and will certainly affect ATW either by accelerating the downside or help to stabilize the stock around $10-$11?

The next quarter results will be very important, but it is still too early to comment meaningfully on this issue.

I recommend to take some profit off the table for the ones who still can, and hold on to the remaining ATW position.
I may buy a little around $8 for some quick trading, however, I am concerned with the long-term survival of ATW due to a very low backlog and find the stock showing a too high valuation.

Note: Do not forget to be one of my followers on ATW and get updated on the most recent ATW news (contracts, sales and earnings results).

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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 trade ATW from time to time.