Seeking Alpha
Growth at reasonable price, long/short equity, foreign companies, master limited partnerships
Profile| Send Message|
( followers)  

This shortened market week proved to be a good one, as measured by the S&P 500 index. The primary reason for this was a statement issued by Mario Draghi, the president of the European Central Bank (ECB). Mr. Draghi stated that the ECB will purchase as many government bonds as needed to stabilize the lengthy and ongoing situation in Europe. This led to a massive rally in the worldwide stock markets on Thursday and Friday. Prior to this announcement, the market was relatively flat for the first two days this week. Oil prices, meanwhile, displayed considerably more volatility. Overall, oil prices closed out the week slightly lower than where they opened it, but it was a very volatile week. As always, this had different effects on the offshore drilling stocks that are tracked by this weekly update series. Also, long-time readers of this series may notice the addition of Pacific Drilling (NYSE:PACD) to this update. I will now be tracking this stock in this series along with six of its peers.

SeaDrill (NYSE:SDRL) opened on Tuesday, September 4 at $40.51. The stock closed at $40.68 in after hours trading on Friday, September 7. SeaDrill shareholders thus profited from a gain of $0.17 or 0.42% over the past week. SeaDrill opened at $40.12 on August 13, 2012. This gives the stock a trailing four-week gain of $0.56 per share or 1.40%. SeaDrill went ex-dividend on Tuesday, September 4. Shareholders as of market close the previous day (Friday, due to the market not being open on Monday) will be receiving a dividend of $0.84 per share. This increases the gain this week to $1.01 or 2.49% when the dividend is considered. Likewise, SeaDrill shareholders experienced a gain of $1.40 or 3.49% over the trailing four-week period when the dividend is considered. SeaDrill's management proposed issuing $1.0 billion in unsecured notes due 2017 earlier this week. This new debt is to be used to pay down other existing debt and fund further growth.

SDRL 5-Day Chart

Source: Fidelity Investments

SDRL 4-Week Chart

Source: Fidelity Investments

Ensco (NYSE:ESV) opened at $57.51 on Tuesday, September 4. The stock closed at $57.05 in after hours trading on Friday, September 7. Shareholders thus suffered a loss of $0.46 or 0.80% over the past week. The stock opened at $55.33 on August 13. Stockholders in the company thus profited from a gain of $1.72 or 3.11% over the trailing four-week period. Ensco went ex-dividend this week, on September 6. Shareholders as of the close of the market on September 5 will receive a dividend of $0.375. Thus, shareholders in the company suffered a loss of $0.85 or 0.15% over the past week. This dividend also increases the company's trailing four-week gain to $2.095 or 3.77%.

ESV 5-Day Chart

Source: Fidelity Investments

ESV 4-Week Chart

Source: Fidelity Investments

Transocean (NYSE:RIG) opened at $48.67 on Tuesday, September 4. The stock closed at $47.61 in after hours trading on Friday, September 7. Transocean's shareholders thus suffered a loss of $1.06 or 2.18% this week. The stock opened at $48.41 on August 13. This gives Transocean stock a loss of $0.80 or 1.65% over the trailing four-week period. Earlier this week, the U.S. Department of Justice charged BP (NYSE:BP) and Transocean with gross negligence in regards to the Deepwater Horizon disaster of 2010. This comes on the heels of an injunction against the company in Brazil being upheld last week. The stock continues to be held back due to the company's legal troubles. The stock is likely to show big gains when these legal issues are finally resolved but that would be a bet that would take quite some time to play out.

RIG 5-Day Chart

Source: Fidelity Investments

RIG 4-Week Chart

Source: Fidelity Investments

Diamond Offshore (NYSE:DO) opened at $66.82 on Tuesday, September 4. The stock closed at $67.53 in after hours trading on Friday, September 7. Shareholders of Diamond Offshore thus profited from a gain of $0.71 per share or 1.06% for the week. The stock opened at $68.10 on Monday, August 13. The stock thus had a trailing four-week loss of $0.57 per share or 0.84%. CLSA initiated coverage of Diamond Offshore this week and assigned it an outperform rating. The firm's analysts gave Diamond Offshore a target price of $75.

DO 5-Day Chart

Source: Fidelity Investments

DO 4-Week Chart

Source: Fidelity Investments

Atwood Oceanics (NYSE:ATW) opened at $46.22 on Tuesday, September 4. The stock closed at $47.95 in after hours trading on Friday, September 7. This gives the stock a gain of $1.73 per share or 3.74% for the week. Atwood opened at $45.22 on August 13. Thus, shareholders in the company experienced a gain of $2.73 or 6.04% over the trailing four-week period.

ATW 5-Day Chart

Source: Fidelity Investments

ATW 4-Week Chart

Source: Fidelity Investments

Noble Corp (NYSE:NE) opened the week at $37.86 on September 4, 2012. The stock closed at $37.15 in after hours trading on Friday, September 7. Thus shareholders suffered a loss of $0.71 or 1.88% for the week. Noble opened at $38.28 on August 13, 2012. Thus, the stock had a trailing four week loss of $1.13 or 2.95%. Noble Corporation announced this week that it expects downtime on rigs in the Gulf of Mexico and Brazil to negatively affect its third-quarter earnings by $0.08 to $0.12 per share. This is unlikely to impact in the company's results in later quarters though so this could present a buying opportunity.

NE 5-Day Chart


Source: Fidelity Investments

NE 4-Week Chart

Source: Fidelity Investments

Pacific Drilling opened the week at $9.56 on September 4, 2012. The stock closed at $9.73 in after hours trading on Friday, September 7. Thus, shareholders experienced a gain of $0.17 or 1.78% for the week. Pacific Drilling opened at $9.51 on August 13, 2012. Thus, the stock had a trailing four week gain of $0.22 or 2.31%.

PACD 5-Day Chart

Source: Fidelity Investments

PACD 4-Week Chart

Source: Fidelity Investments

With the exception of Ensco, Transocean, and Noble Corp, all seven of these stocks delivered gains over the past week. The largest gain was delivered by Atwood Oceanics with SeaDrill holding the second place, after accounting for dividends. Transocean was the worst performer with Noble Corp delivering the second worst performance over the past week. Ensco's loss was negligible by comparison. Noble was the worst performer of the seven over the trailing four-week period with Transocean holding the dubious honor of being the second worst performer. Atwood Oceanics was the best performer over the trailing four-week period with none of the others anywhere close.

Source: Weekly Performance Update On 7 Offshore Drilling Stocks