Source: Atwood Advantage - ATW website
Complete fleet status as of July 27, 2016:
1. UDW - UltraDeepwater Drillships and SemiSubmersibles.
|1||Atwood Achiever||8/2014||12*40|| |
Stanby starting 6/16 (95%)
[Kosmos Energy] Mauritania/Senegal
|2||Atwood Archer|| |
Delivery of rig delayed up to 6/30/2018 at ATW option
|3||Atwood Admiral|| |
Delivery of rig delayed up to 9/30/2017 at ATW option
|4||Atwood Advantage||2013||12*40|| |
mid 9/16-mid 11/16
mid 11/16 - 12/16
US Gulf of Mexico
|5||Atwood Condor||2012 Semi-Sub||10*40|| |
US Gulf of Mexico
|6||Atwood Osprey|| |
185 (min. 45-days)
2. Old Semi-submersibles.
3. Jackups and Others
|1||Atwood Aurora||2008||350'*30k||9/16||185||[Addax Petroleum] Cameroon|
|2||Atwood Beacon||2003||400'*36k|| |
|3||Atwood Mako||2012||400'*30k||Available|| |
|5||Atwood Orca||2013||400'*30k|| |
|[Mubadala Petroleum] Thailand|
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 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.
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|
Commentary about the stock future direction:
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.