Entering text into the input field will update the search result below

Offshore drilling recovery "further off than expected," Susquehanna says

Jul. 06, 2015 3:48 PM ETTransocean Ltd. (RIG) StockATW, RIG, RDC, NE, DOBy: Carl Surran, SA News Editor10 Comments
  • A recovery in offshore drillers such as Transocean (RIG -4.5%), Diamond Offshore (DO -2.2%), Atwood Oceanics (ATW -3.7%), Rowan (RDC -2.3%) and Noble Corp. (NE -1.9%) may be further off than expected, Susquehanna analysts say.
  • After believing that an acceleration in the rate at which rigs are being cold stacked or retired could suggest the start of an industry recovery in H2 2016, the firm says the fact that newer, high-specification rigs are now rolling off contract without being renewed points to a more protracted downturn than previously anticipated.
  • The firm says RIG and DO possess the oldest ultra-deepwater fleets, with average respective ages of 9 and 17 years old; given the competitive disadvantages of relatively old fleets, free cash flow yields for the companies will be negative (-28% for RIG, -9% for DO) in 2016.
  • Susquehanna says the drillers were able to beat its estimates for drilling costs in Q1 by 6% on average, but part of the cost savings were the result of cost deferments, particularly expenses related to repairs and maintenance.

Recommended For You

About RIG Stock

SymbolLast Price% Chg
Market Cap
PE
Yield (TTM)
Rev Growth (YoY)
Prev. Close
Compare to Peers

Related Stocks

SymbolLast Price% Chg
RIG--
Transocean Ltd.