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  • Rosneft to continue drilling in Arctic [View news story]
    Music to the ears for North Atlantic Drilling (NADL) is the first thing that comes to mind..
    Oct 24, 2014. 11:13 AM | Likes Like |Link to Comment
  • Noble Corp.: Safest Offshore Driller With Sustainable 7% Dividend Yield [View article]
    What differentiates Ensco somewhat is their strategy. More than any other offshore driller Ensco has preached the benefits of standardization next to their upgrading / high-grading. They clearly benefited accordingly, becoming the second largest driller after acquiring Pride in 2011. All the while maintaining a pristine balance sheet and leverage ratio.

    It's also important to note if rigs have been upgraded, and if so when. Ensco has 46 premium jack-ups (42 + 4 under construction). The vast majority of rigs build before the millennium have been upgraded in recent years. Fun Trading provides an easy overview of year build/year upgraded in his articles, also linked to the company website:
    Oct 7, 2014. 04:56 AM | 1 Like Like |Link to Comment
  • Noble Corp.: Safest Offshore Driller With Sustainable 7% Dividend Yield [View article]
    "Ensco has suffered in the eyes of investors due to their large portfolio of standard jack-ups and their aging rig fleet, which has an average age of 20 years old."

    Your information on Ensco is incorrect. During Q2 Ensco already took a decision (and impairment) to sell 5 floaters, now included in discontinued operations. 14 older rigs sold since 2010. Ensco's remaining fleet has an average age of 9 years, not 20. The second youngest fleet.

    Adjusted earnings went from $1.48 per share to $1.58. Ensco has the lowest leverage ratio and highest utilization rates in the industry, resulting in the highest net income margin within the peer group. Margins should stay quite healthy because of the UDWs delivered next year, two already contracted at $550.000 - $ 650.000 from Q3 2015 until 2020.

    Ensco's $3.00 dividend is about half of EPS and less than 1/3 of OCF. A cushy coverage ratio means Ensco can take a lot more downside in revenue than most, and still pay its bills!..
    Oct 6, 2014. 10:48 AM | 5 Likes Like |Link to Comment
  • Don't Panic, Grab Seadrill Out Of The Bargain Bin Instead [View article]
    I wouldn't worry too much about NADL. One way or another the Rosneft deal will go forward. Rosneft will continue drilling in the Kara Sea.

    “We will continue working no matter what,” Sechin said in an interview on board a polar research vessel as he prepared to unveil the find he named Victory. “We will plan the work for next season. As I said, now we’ve drilled only the first structure -- at Universitetskaya. There are more than 30.”

    “We’ll continue drilling here next year and the years after that,” Sechin said. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

    Russia Oil Chief Says Sanctions No Bar to Arctic Drilling:
    Sep 29, 2014. 08:39 AM | 2 Likes Like |Link to Comment
  • Russian Arctic Find: A Glacial Oil And Gas Play [View article]
    The crude is “super-light,” the company said, meaning when it’s refined it will produce a high proportion of gasoline and diesel. That’s likely to make it more valuable than Russia’s existing export grade, Urals.

    The discovery showed the Kara Sea has the potential to become one of the world’s most important crude producing regions with more oil than that Gulf of Mexico, according to Rosneft. The mid-range forecast for when he expects production to start is seven years, Sechin said.

    “We’ll continue drilling here next year and the years after that,” Sechin said. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

    Russia Oil Chief Says Sanctions No Bar to Arctic Drilling:
    Sep 29, 2014. 08:10 AM | Likes Like |Link to Comment
  • Russian gas supplies to central Europe still falling [View news story]
    Slowly but surely tightening the screws, hardly unexpected..

    The US doesn't mind playing high stakes poker for Crimea / the Black Sea Fleet from across the pond. Only one problem, EU politicians are holding the lousy hand and will blink first come winter..
    Sep 22, 2014. 10:30 AM | 2 Likes Like |Link to Comment
  • Making The Case For A Seadrill Ltd. Management Buyout [View article]
    John Fredriksen = high dividends & (growth through) deconsolidation

    JF considering an MBO seems rather... uncharacteristic!
    Sep 22, 2014. 10:06 AM | 4 Likes Like |Link to Comment
  • Seadrill: What Should Shareholders Do In Light Of Recent Events? [View article]
    'Emotional discipline' as Buffett (and Jay-Z) so eloquently put it in the interview with Steve Forbes. Sticking with the current facts helps.

    This is what Alf Ragnar Lovdal, NADL's chief executive, had to say recently to the FT. I hardly see it mentioned here on SA, despite the steady stream of SDRL and NADL articles:

    “I’m running a business, and I do that within the framework of rules and regulations. I do that within the rules of the sanctions as well. If it’s OK, then I do the business,”

    “The geopolitical picture, I can’t manage that. That is managed by others. I respect it, and I spend time to understand what the consequences are. But if it’s possible for me to operate, then I operate. It’s business for me.”

    “We have a rig up there already and that’s OK. Next summer the next rig goes. We have some time to sort out something,”

    Regarding the possibility of sanctions hitting suppliers, he replies obliquely: “When we are building [new] units, they can be used elsewhere. The units we have and the ones we are building can be used worldwide.”

    “To have an oil company as an owner with two board members, we believe it’s very good for us. Obviously we get to know the way oil companies think, in this case Rosneft.”

    (NADL, which employs about 1,600 people and has contracts with Statoil, Total and ConocoPhillips, was spun off by SeaDrill in 2012 to focus on harsh environment drilling and the Arctic. The land rigs, which were included in the 30 per cent acquisition, seem a deviation from this strategy and some industry observers suspect it was a way for Rosneft, financially threatened by western sanctions, to pay for most of its stake in NADL.)

    Mr Lovdal confirms the Russians offered him the business but adds: “We see the benefits for the whole relationship, both onshore and offshore: the benefits of presence, getting to know them culturally . . . For us presence is extremely important.”

    Recently sold NADL @$10.75, reentered (today actually) at $8
    Sep 18, 2014. 11:40 AM | 2 Likes Like |Link to Comment
  • Comprehensive Review Of Newbuild Orders For Drillships And Semisubs [View article]
    Good, focused piece PP. Also like RIG (and ESV) at this level. Balance sheet always matters, the offshore industry is notoriously cyclical..
    Sep 12, 2014. 05:18 AM | 2 Likes Like |Link to Comment
  • Yield On Cost: A Vitally Important Consideration For Retired Investors [View article]
    Outstanding article Chuck, required reading for all mid- and long-term investors!
    Your article, and especially the detailed real-life portfolio example from 2006-2014 which includes the credit crisis, provides great insight into why people should set-up a diversified portfolio of solid companies at a fair price, based on your risk appetite and financial goals. Only then can you benefit from growth in earnings and increased YOC over time, while being patient and not panicking when confronted with short-term fluctuations..

    The more you trade, the more you usually start to underperform. Why wouldn't you keep it simple and focus on a few easy to understand investments in businesses with proven competitive advantages.
    Sep 9, 2014. 05:58 AM | 1 Like Like |Link to Comment
  • China Integrated Energy: Ripe for Significant Upside After Appointing New Auditor, Updating Guidance [View article]
    Thanks for posting the 10/K Caifu, it's been a long time coming..
    Sep 5, 2014. 04:21 AM | Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    KBC Securities update BAM, 'Come rain or come shine':

    Rabobank update BAM, 'Some trouble, but can double':

    "BAM stated that the new CEO will present more details regarding the cost and working capital reduction programmes in October. We reiterate our opinion thet the current share price offers attractive upside versus the assumed risks and our SOTP [sum of the parts - red.] of EUR 3,78 per share is backed by hard assets. We reiterate our Buy and PT of EUR 3,00."

    "For FY 2014E BAM forecasts a profit before tax and exceptional items of around EUR 20m. In our view, the company is somewhat too conservative and we are estimating EUR 32m."

    "On a positive note, BAM's balance sheet includes EUR 194m PPP assets (net of debt) and >EUR 1bn tangible property development assets. The Dutch housing market is improving faster than anticipated and this could unlock EUR 50m free cash flow per annum."
    Sep 3, 2014. 04:49 AM | 2 Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Interesting to hear you have worked and lived in Russia during your career. I've written articles on both Rosneft ( and Gazprom ( during the past 24 months, and have been following the political and economic situation there with some interest for a number of years now.

    I think Russia's post-Putin era is still a long way off, and a lot of damage is being done in the meantime. Were it not for the country's abundance of natural resources (and Western + Eastern reliance on those resources) the country would be in a very difficult situation indeed, although many will succesfully argue that is already the case now.

    On BAM, I certainly understand your disappointment as a longer term shareholder. Past management's performance in terms of risk assessment, execution, cost control, and lack of focus on maximizing profitability and shareholder value is evident to witness. The tough economic situation between 2008 - H2 2013 has also left its marks.

    On the other hand, this article was written as a dividend quick picks & list (requiring additional own DD) piece before being selected as Pro by SA. Based on BAM's current depressed share price, which provides compelling YOC and valuation metrics, also in light of historic dividend levels and earnings potential.

    The announced improvement programs - if properly executed -, a new management team, and increased (Dutch) economic activity may provide positive catalysts for BAM going forward. Technically the share price seems to be bottoming out since the low of August 8, trend improvement the last week or so since release of the H1 numbers.
    Sep 1, 2014. 05:32 AM | 2 Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Aug 29, 2014. 11:30 AM | 1 Like Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Well, you're certainly entitled to your opinion Enge. I would, however, like to point out that the Dutch government has been making the labor market more flexible, the pension system more sustainable (while already on of the most sophisticated in the world, ranked second worldwide last year), and has been actively stimulating the housing market to good effect along with the general trend of lower spending.

    Next to the pick up in housing, you're also seeing a recovery in household spending. The EC actually increased its Dutch economic forecasts for this year and 2015 because of rising investments and increased household consumption. Economic growth turned positive in Q2 2013 and projected to continue its momentum this year and into 2015.

    Despite the many difficulties Holland may face it should, lastly, be noted that the Netherlands still remains one of the most competitive economies in the EU. I think the country as a whole isn't doing too shabby all things considered..
    Aug 28, 2014. 09:19 AM | 1 Like Like |Link to Comment