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  • Ascendas REIT Offers Growth Potential And A High, Stable Dividend
    Thu, Sep. 11 ACDSF 1 Comment

    Summary

    • Ascendas REIT is a large and well diversified business space and industrial real estate investment trust.
    • The trust's properties are occupied by 1,330 tenants from a wide cross section of industries.
    • The long-term commercial leases that the trust has with its tenants provides it with protection against short-term market fluctuations.
    • Ascendas REIT purchased a new property a few weeks ago that should allow it to continue its historical growth in net property income and distributions.
    • Ascendas REIT currently yields 6.03%, making it a good play for an investor seeking growth and income.
  • Seadrill Partners' Second Quarter Results Show Growth And The Sustainability Of The High Distribution
    Mon, Sep. 8 SDLP 1 Comment

    Summary

    • Seadrill Partners' second quarter results show significant quarter-over-quarter growth.
    • This growth was primarily due to improved rig uptime performance and the presence of a new rig in its fleet.
    • For the first time since the first quarter of 2013, Seadrill Partners generated sufficient cash flow to cover its 6.63% distribution in full.
    • The company's long-term contracts should ensure that its cash flows are stable to growing going forward.
  • Seadrill's Results Stronger Than Headlines Claim And Reveal Strong Forward Growth Potential
    Wed, Sep. 3 SDRL 53 Comments

    Summary

    • Seadrill's failure to meet the expectations of analysts and the cautious outlook issued by the company resulted in the stock being punished.
    • A closer look at these results reveal that the company's results are actually stronger than they initially appear.
    • Seadrill's recent success at winning rig contracts for its newbuilds will result in growth going forward.
    • Drilling rig dayrates have been falling due to competitive pressures but Seadrill is well-positioned to weather this.
    • The company's macro-environment is likely to improve in the future.
  • North Atlantic Drilling's Earnings Report And Rosneft Deal Show Strong Growth Potential
    Wed, Sep. 3 NADL 13 Comments

    Summary

    • North Atlantic Drilling's revenues and profits grew significantly quarter-over-quarter, as evidenced by its latest earnings report.
    • The improved fleetwide uptime and new rig were the reasons for this growth.
    • The West Linus rig is likely to result in further quarter-over-quarter growth in the third quarter.
    • North Atlantic Drilling's deal with Rosneft will result in further growth due to the company needing to construct two more rigs to meet its contract.
    • The company will also see further growth due to its purchase of Rosneft's onshore drilling fleet.
  • Pacific Drilling Second Quarter Results Show Growth Story Playing Out
    Thu, Aug. 28 PACD 13 Comments

    Summary

    • Pacific Drilling announced very impressive second quarter results earlier this month.
    • The company achieved its highest revenue in history due its lack of downtime and solid reliability from its rig fleet.
    • The company has a new rig starting on its first contract in the third quarter that will result in both third and fourth quarter growth.
    • Pacific Drilling has two more new rigs that will serve as drivers for its growth going forward, assuming they can obtain contracts.
    • There is a good chance that Pacific Drilling's new rigs will obtain such contracts before they are ready to begin working.
  • Noble Corp.'s Contract Status Could Have An Adverse Impact On Revenues In The Near Term
    Wed, Aug. 27 NE 1 Comment

    Summary

    • Offshore drilling giant Noble Corp. has a number of drilling rig contracts that will be expiring prior to the end of 2014.
    • The expiration of these contracts will put downward pressure on revenues, should the company fail to secure new contracts.
    • There are signs that Noble will be able to secure new contracts for at least some of these rigs prior to the end of the year.
    • Lower dayrates on the new contracts may still put pressure on revenues.
    • Noble still has the potential for growth throughout 2015.
  • Understanding The Current Conditions In The Offshore Drilling Industry And Understanding Future Trends
    Wed, Aug. 20 ESV, NADL, PACD 45 Comments

    Summary

    • Various Wall Street firms have downgraded the companies in the offshore drilling industry. While their concerns appear to be valid, it is a more complicated situation than most think.
    • There is no weakness in the harsh-environment market at all.
    • The jack-up market was the bastion of the strength in the industry and still is, although recent trends are concerning.
    • The conditions in the ultra-deepwater market do not appear to be as bad as the market believes.
    • The long-term future of the ultra-deepwater industry is quite bright.
  • Rowan Q2 Results Show Promising Signs
       • Thu, Aug. 14 RDC Comment!

    Summary

    • Rowan's Q2 results were somewhat weaker than last year's due largely to rig downtime.
    • Despite this weakness, the company beat analysts' expectations.
    • Rowan is likely to deliver significant growth going forward due to the strong contract status of its newbuild ultra-deepwater rigs.
    • The stock looks substantially undervalued at the current price.
  • Seadrill's West Saturn Contract Promises To Deliver Forward Growth
    Wed, Aug. 13 SDRL 11 Comments

    Summary

    • Seadrill was recently awarded a two-year contract for the use of the West Saturn, one of the company's new ultra-deepwater drillships.
    • This contract will result in ExxonMobil paying Seadrill $497 million over a two year period.
    • This contract should generate incremental EBITDA growth of 5.61% over the first quarter.
    • This contract should also generate incremental operating cash flow growth of 5.03% over the first quarter.
  • Noble Corp.'s Earnings Show Strong Forward Growth Potential
    Editors' Pick • Thu, Aug. 7 NE 5 Comments

    Summary

    • Noble Corp. saw its second-quarter revenue and earnings adversely affected by scheduled rig downtime due to maintenance and other scheduled shipyard projects.
    • The negative impact was mostly offset by the startup of new rigs.
    • These new rigs, combined with two others will be the driver of forward growth.
    • The spin-off of Paragon Offshore will reduce the company's forward earnings so the growth prospects need to be considered with this in mind.
    • Noble Corp. will continue to grow following the spin-off.
  • Ensco's Second Quarter 2014 Results Are Not As Bad As They First Appear
    Mon, Aug. 4 ESV 30 Comments

    Summary

    • Ensco's reported net income showed a significant drop compared to the prior year quarter.
    • This net income drop was primarily due to a $1.5 non-cash writedown. Excluding this, the company actually showed solid growth.
    • Ensco has noticed that E&P companies greatly prefer newer, modern rigs so the company is selling off some of its older rigs in order to reposition itself.
    • Ensco has been experiencing challenges in the market for floating midwater rigs.
    • The company has the potential for forward growth due to new rigs coming online.
  • TeliaSonera's Second Quarter Results Show Stability And Growth For This Telecom
       • Fri, Aug. 1 TLSNF Comment!

    Summary

    • TeliaSonera's Q2 2014 results were remarkably similar to its Q2 2013 results, with only minor fluctuations in most of its earnings numbers.
    • TeliaSonera's FCF fell year-over-year due largely to higher capital expenditures and the timing of a dividend from Russia's Megafon.
    • Adverse currency movements in many of the company's markets had an overall negative effect.
    • Central Asian markets offer potential for growth.
    • The company should be able to maintain or increase its sizable dividend going forward. This will prove beneficial for investors interested in income.
  • A Look At Noble's Current Industry Position And Its Forward Prospects
    Editors' Pick • Tue, Jul. 29 NE 2 Comments

    Summary

    • Noble Corp. is one of the largest offshore drilling contractors in the world, boasting a fleet of 77 offshore rigs.
    • Noble Corp.'s large fleet grants it significant amount of international diversification, protecting the company from adverse governmental policies or decisions.
    • Noble has one of the oldest fleets of all the major companies in the industry but it is seeking to change this through a spin-off.
    • Noble has a strong contract backlog which should allow it to maintain its dividend and generate stable revenues, although its dependence on Royal Dutch Shell is a concern.
    • Noble has significant growth prospects due to its newbuild rigs and should generate growing free cash flow.
  • Several Recent Geo-Political Events That Could Threaten The Dollar's Dominance In International Trade
    Thu, Jul. 17 BNPQF, CRZBF, CSCO 9 Comments

    Summary

    • There have been several events that have occurred in recent weeks that could weaken the dollar's status as the dominant currency in international trade.
    • China and Russia appear to be jointly attempting to replace the dollar with another currency.
    • China has moved to make the Yuan directly convertible into several currencies instead of only dollars.
    • French officials are openly calling for a replacement to the U.S. dollar as the international currency.
    • France, Germany, Qatar, and several other nations are refusing to follow the U.S. sanctions on Russia, which may require another currency to do business with the latter nation.
  • Did Seadrill Partners Overpay For West Auriga?
    Editors' Pick • Wed, Jul. 2 SDLP 37 Comments

    Summary

    • Seadrill Partners paid an implied purchase price of $1.24 billion for West Auriga.
    • West Auriga only cost $600 million to construct.
    • The rig is currently contracted to BP until October 2020. The present value of this contract at the time of the rig's acquisition was approximately $722.62 million.
    • The purchase price looks far too high for just the BP contract.
    • When we consider the rig's future cash flows after the BP contract ends then the price that Seadrill Partners paid looks reasonable.
  • Future Of Ultra-Deepwater Industry Is Quite Bright Despite Current Weakness
    Editors' Pick • Wed, Jul. 2 PACD, SDRL 18 Comments

    Summary

    • The ultra-deepwater drilling industry is currently suffering from a temporary contracting slowdown, but several macro trends are positive for the industry.
    • The current downturn is being driven by strained cash flows at some production companies and other companies holding off on contracting activity until dayrates bottom.
    • Deep- and Ultra-deepwater environments are the only environments in which reserves are growing. This will eventually force companies to expand further in these areas.
    • Demand for ultra-deepwater rigs is projected to exceed supply over the near- to medium-term, providing upward pressure on dayrates.
    • Rising dayrates will result in growing profits for ultra-deepwater drilling contractors.
  • Could China And Russia Be Trying To Kill The Petrodollar Standard?
    Editors' Pick • Mon, Jun. 30 COP, GZPFY, OGZPY 63 Comments

    Summary

    • One of the major reasons that the U.S. dollar is the reserve currency of the world is because all transactions for oil are denominated in U.S. dollars.
    • The U.S. dollar's preferred status in trade has allowed the United States to borrow more money than it otherwise would be able to.
    • This status in trade has also resulted in the U.S. dollar being valued higher relative to most currencies than it otherwise would.
    • Russia has begun selling oil in currencies other than the dollar. China has been actively working to ensure that all its oil purchases are in renminbi.
    • Considering the dominance that these two nations have in the oil trade, this could be a significant blow to the U.S. dollar's reserve dominance.
  • Analyzing The Impact Of The West Jupiter Contract On Seadrill's Cash Flows
    Editors' Pick • Thu, Jun. 26 SDRL 71 Comments

    Summary

    • Seadrill successfully secured a long-term contract for its brand-new West Jupiter drillship earlier this month.
    • The contract has a total value of $1.1 billion over five years.
    • In order to determine the profitability of the rig, we need to break the contract down into dayrate and mobilization fee and determine the company's cost of operating it.
    • The West Jupiter should generate incremental cash flow of $32-$34 million per quarter.
  • A Brief Look At Lukoil's Operations In Iraq And Why The Company Will Not Be Affected By Violence
    Wed, Jun. 25 LUKOY Comment!

    Summary

    • Russia's Lukoil has been developing what will soon be one of the largest oil fields in the world, West Qurna-2 in Iraq.
    • The nation of Iraq is in the midst of sectarian violence between the national government and a Muslim fundamentalist group.
    • This violence has caused several oil companies to evacuate the country.
    • The violence has been so far focused in the north and central areas of the country but Lukoil's field is in the south.
    • Thus, the risk to Lukoil is not particularly high at this point, but could get that way if ISIS expands the fighting to other areas.
  • Weakening Consumers Will Be A Drag On The Retail Sector Going Forward
    Wed, Jun. 25 AEO, ARO, BBRYF 22 Comments

    Summary

    • The harsh winter this year showed that many consumers do not have much flexibility in their family budgets.
    • The median consumer in the United States has seen their real income decline since 2000.
    • The job market still remains weak and thus opportunities to increase their incomes through the acquisition of a better job remains elusive for most consumers.
    • Rising costs of necessities has further strained budgets.
    • These trends could eventually reduce the amount of money that consumers have available to spend on discretionary purchases at retailers.
  • 3 Russian Energy Majors Bucking The Declining Production Trend
    Editors' Pick • Thu, Jun. 19 BP, COP, CVX 14 Comments

    Summary

    • Many western oil and gas majors have suffered from declining production over the 2009-2013 period and this has adversely affected their revenues.
    • Growing production is important for oil and gas companies because a company cannot grow over the long term unless it sells progressively more products.
    • Russian oil and gas companies have managed to grow their production over the 2009-2013 period.
    • Many of these Russian companies trade at considerably lower valuations than their American counterparts.
    • These Russian companies also trade with comparable or higher dividend yields than their western peers.
  • Seadrill's Earnings Report Continues To Show Company's Strength
    Thu, Jun. 12 SDRL 71 Comments

    Summary

    • Seadrill's first quarter earnings report was the first in which Seadrill Partners was not consolidated into its results which resulted in the earnings looking weaker than they were.
    • Several of Seadrill's and its subsidiaries' rigs suffered from equipment breakdowns during the quarter, weakening results.
    • Management is committed to fixing these problems which should improve earnings performance going forward.
    • The company's new contract for the West Jupiter rig should result in forward growth.
    • Seadrill's management changed its mind about freezing the dividend and hiked it once again.
  • Don't Sweat Seadrill Partners' 61.4% Quarter-Over-Quarter Net Income Decline
    Fri, May. 30 SDLP 18 Comments

    Summary

    • Seadrill Partners' net income fell by 61.4% in the first quarter compared to the previous one.
    • The reason for this decline has nothing to do with the company's operations.
    • This decline was due entirely to a write-down related to a hedging strategy that the company uses to manage its debt payments.
    • Seadrill Partners' cash flow was not impacted by this decline in net income and, in fact, the company's cash flow increased significantly quarter-over-quarter.
  • Seadrill Resolves Tax Dispute With Norwegian Authorities, Here's What We Know
    Wed, May. 21 SDRL 57 Comments

    Summary

    • Seadrill has been disputing a retroactive capital gains tax imposed on it by the Norwegian authorities for the past few years.
    • This dispute was resolved earlier this month in a secret deal.
    • The company estimated its maximum exposure at $263 million, $63 million of which would be paid by North Atlantic Drilling.
    • This deal could have either a one-time negative impact on both companies' results or a recurring one, depending on the terms.
    • As this deal was resolved in secret, we do not know any details about the consequences.
  • Making Sense Of The Gazprom-CNPC Gas Deal
    Thu, May. 15 OGZPY, PTR 17 Comments

    Summary

    • Gazprom and CNPC are set to sign a deal that will result in Gazprom supplying China with 38 bcm of gas annually by 2018.
    • This is in addition to a 2011 deal that called for Gazprom to provide 30 bcm of gas annually by 2015.
    • This will result in substantial increases to Gazprom's revenue once it takes effect.
  • Seadrill's Modern Fleet And Contract Status Provides An Advantage Over Peers
    Tue, May. 13 SDRL 13 Comments

    Summary

    • Seadrill is one of the largest offshore drilling companies in the world and has the most modern fleet of all the majors.
    • Seadrill has rigs operating in every major oil producing region which provides it with protection against regime risk.
    • Seadrill's modern fleet provides an advantage in contract negotiations due to the preference of oil and gas companies towards these rigs.
    • Many competitors will need to replace their jack-up fleets due to the rigs reaching the end of their useful life. Seadrill is an exception.
    • Seadrill is extremely well-positioned to weather the short-term slowdown in the drilling industry.
  • Gazprom Looks Incredibly Undervalued Despite Sanctions On Russia
    Mon, May. 12 OGZPY 36 Comments

    Summary

    • Gazprom is by far the largest natural gas producer in the world but its market cap does not reflect this.
    • The European Union is unlikely to go along with any sanctions against Gazprom as the company is responsible for 1/3 of the gas consumed by the continent.
    • Gazprom's natural gas reserves are almost ten times the size of ExxonMobil's.
    • Gazprom is more profitable than any American oil company despite having a lower market cap.
    • Gazprom currently trades at a P/E of less than 3.
  • Investigating The Impact Of Consolidation On Seadrill's Fourth Quarter Results
    Wed, May. 7 SDRL 46 Comments

    Summary

    • Seadrill owns interests in three subsidiary companies that are consolidated into its results.
    • Seadrill does not own a 100% stake in any of these subsidiary companies.
    • Therefore, Seadrill does not actually get all of the money earned by these companies even though it all is reported on its results.
    • Deciphering the results to determine what Seadrill earned on an isolated basis is extremely difficult.
  • First REIT: Offering Investors The Best Of All Worlds - Safety, Growth, And Income
    Sun, Apr. 27 FESNF 13 Comments

    Summary

    • First REIT is a healthcare-focused real estate investment trust with fourteen properties located in Singapore, Indonesia, and South Korea.
    • The trust's tenants are in an inelastic industry and this should ensure that they will be able to consistently make the rent payments.
    • First REIT has significant growth potential through the acquisition of new properties that should allow it to grow its topline revenues at 12% year-over-year.
    • The trust is also looking at acquiring several more properties that could allow it to continue its strong growth.
    • First REIT provides income-seeking investors with a distribution yield in excess of 7% and should be able to increase this going forward.
  • Novo Nordisk: Increasing Obesity Rate A Positive For Stock, But Share Price May Have Increased Too Quickly
    Thu, Apr. 24 NVO 12 Comments

    Summary

    • The obesity rate has been increasing among all age groups in the United States and abroad.
    • Obesity carries with it a number of health problems including the development of type-2 diabetes.
    • Novo Nordisk is the world's largest manufacturer of diabetes care products.
    • Novo Nordisk is likely to grow as type-2 diabetes becomes more common.
    • Unfortunately, the stock price has increased much more rapidly than the company's earnings so investors may want to wait for a dip before buying.
  • Vantage Drilling: Modern Fleet May Produce Growth That Makes Debt Bearable
    Mon, Apr. 21 VTG 16 Comments

    Summary

    • Vantage Drilling has one of the most modern fleets of ultra-deepwater and shallow-water drilling rigs in the industry.
    • This modern fleet is highly desired by exploration and production companies.
    • Vantage Drilling has had to take on a very high debt load to build this fleet.
    • The company has very strong forward growth potential that should allow it to carry this debt load.
  • Ascendas REIT: A Bastion Of Stability Amidst The Market Storm
    Tue, Apr. 15 ACDSF 7 Comments

    Summary

    • The market has seen significant volatility year to date and this may have spooked some investors.
    • Ascendas REIT appears to offer a bastion of stability in the storm.
    • Ascendas REIT has one of the most diverse property portfolios in Singapore and has a very wide tenant base.
    • No single tenant or property accounts for a large percentage of the trust's revenue or income.
    • The trust's unit price has been remarkably stable over the past year and pays a high distribution.