Thu, Nov. 19, 6:12 PM
Tue, Nov. 10, 12:48 PM
Tue, Nov. 10, 12:28 PM
- Atwood Oceanics (ATW +13.8%) surges following much better than expected FQ4 earnings on 12% higher revenues and agreeing to a contract extension for the ultra-deepwater rig Atwood Advantage with Noble Energy.
- Cowen analysts explain that the beat was caused by more than just cost cutting, with contract drilling revenues of $349M ahead of their $337M forecast, driven by $197M in ultra-deepwater revenues that rose 13% Q/Q; deepwater and jackup revenues of $79M and $73M also were ahead of forecasts and up a respective 3% and 9% Q/Q.
- Cowen says ATW's EBITDA margin of 61% was ahead of its 57% estimate, and was the highest on record since 63% in FQ2 2011.
- In its agreement to extend the contract for the Atwood Advantage for an additional three months through August 2017, ATW will lower its dayrate to $240K/day, 60% less than the $584K dayrate the rig had fetched previously under a three-year contract.
Tue, Nov. 10, 6:21 AM
Sun, Nov. 8, 5:35 PM
- AEGR, AMBC, APEI, APPS, APU, ASEI, ATW, BDE, BEAT, CALL, CARA, CHMI, CKEC, CZR, DEPO, DTSI, EGY, ENV, FF, GALE, HALO, HMIN, IFF, IPAR, JAZZ, JIVE, JMBA, KEYW, LEAF, LF, LGF, LGND, MDR, MODN, NOR, NSPH, OMER, OPK, PDM, PFIE, PINC, PSIX, PTCT, PTLA, PVA, QNST, RARE, RAX, RBCN, REN, REXX, RLD, RMTI, SB, SBRA, SCLN, SUNE, TERP, TPC, TTEC, TTGT, TUBE, TXTR, UGI, VSAT, WWD, XON, XONE, ZGNX
Thu, Nov. 5, 2:47 PM
- Transocean (RIG -8.5%) sinks after reporting better than expected Q3 earnings, but it was "low quality beat," Citigroup’s Scott Gruber writes, as the effective tax rate and deprecation were both below forecasts.
- Reiterating his Sell rating, Gruber says RIG's Q3 operating costs came in higher than consensus expectations, unlike the other offshore drillers that beat estimates on cost control, EBITDA was roughly even with consensus, and gross margins declined 3% Q/Q to 45%.
- RIG, which previously announced plans to scrap 21 floaters, added another during Q3, the 32-year-old semi-submersible GSF Rig 135.
- CEO Jeremy Thigpen said in today's earnings conference call that tough times would continue for offshore drillers over the next year or two as weak oil and gas prices rule out new investments, but activity eventually will rebound because oil companies have to replace dwindling reserves.
- The CEO said RIG would be interested in making a bid for an entire company, but only if the value was good and the deal gave RIG a chance to upgrade its fleet.
- RIG also lowers its full year 2015 expense guidance to $415M-$420M, partly due to earlier debt retirements during the quarter.
- Related peers also are lower: RDC -4.6%, SDRL -3.7%, ATW -3%, NE -2.4%, ESV -0.9%, DO -0.2%.
Fri, Oct. 23, 2:47 PM
- Noble Corp. (NE -0.9%) investors do not appear too upset about the company's move to cut its dividend by 60%, as shares are down less than some of its offshore drilling peers.
- Citigroup's Scott Gruber thinks NE likely came to the realization that it can lower its dividend with minimal resistance from shareholders given the competitive landscape; also, the $220M/year saved through lowering the payout will help NE's liquidity if the oil downturn prove worse than forecast, and provides ammunition for future acquisitions should bid/ask spreads converge.
- Also: RIG -0.6%, SDRL -2.7%, DO -0.1%, ESV -0.3%, RDC +0.1%, ATW -1%.
Thu, Oct. 15, 3:25 PM
- Wells Fargo analysts Judson Bailey and Coleman Sullivan say they “did not think it was possible at this point in the downturn, [but] recent data points for the offshore drilling industry suggest worse market conditions than we expected."
- The analysts say overall demand in the jack-up market seems slightly below forecast, while the global floater market appears to be trending worse in both demand and dayrate; combined with an increase in cancelled or unclaimed newbuild jack-ups and floaters still in the relatively early stages, they expect to see "a steady dose of distressed sales over the next 12-24 months that will push asset values down further."
- The firm says the only good news is that drilling contractors are quickly coming to grips with the magnitude of the downturn and close to executing another round of cost reductions that should help preserve cash flow and move toward a global cost structure more in line with new activity levels.
- Offshore drillers are mostly higher today: DO +1.7%, ATW +1.1%, RIG +2.3%, ESV -0.9%, SDRL +2.1%, RDC -0.2%, NE -0.1%.
Thu, Oct. 8, 11:47 AM
- Termination notices and rig stacking/disposal indications from Ocean Rig UDW (ORIG -16%) "foreshadow the difficulties facing the offshore drilling subsector as we move into 2016," say Raymond James analysts Praveen Narra and J. Marshall Adkins.
- "Though cost control and newbuild delays drove Ocean Rig to post an impressive Q2, we remain concerned about the underlying fundamentals of the business and financial leverage in an anemic market," they say, maintaining their Market Perform rating.
- Related names: Seadrill (SDRL -4.3%), Transocean (RIG -4.5%), Ensco (ESV -1.7%), Noble Group (NE -2.7%), Rowan (RDC -1.4%), Diamond Offshore (DO -0.3%), Atwood (ATW -2.2%)
- Previously: Ocean Rig -13% following fleet update (Oct. 7)
Mon, Sep. 28, 6:19 PM
- Transocean (NYSE:RIG) is upgraded to Hold from Sell at Deutsche Bank, which believes the company - with a new management team in place - is in position to take radical restructuring measures that could include re-capitalizing the balance sheet and scrapping up to 40 rigs.
- While Deustche Bank was feeling a little better about RIG, Susquehanna sticks with its Negative outlook and $11 price target even while raising its estimates for the beaten-down driller; despite RIG’s attempt to lower costs and operate under a smaller scale, the firm sees the challenging market dictating RIG's outlook for at least the next two years amid an environment of muted demand and rig oversupply.
- It was a rough day for offshore drillers: RIG -4.7%, ESV -6.3%, RDC -2.4%, DO -5.2%, ATW -5.7%, NE -4.3%, SDRL -8.9%, ORIG -6%, PACD -11.5%.
Thu, Sep. 3, 3:44 PM
- Credit Suisse downgrades Seadrill (SDRL -1.4%) to Underperform from Neutral with a $5 price target, cut from a previous $7, and Pacific Drilling (PACD +0.5%) to Neutral from Outperform with a $3 target, down from $4 earlier, while maintaining an Underperform rating on the overall offshore drilling sector.
- The sector "will get worse before getting better," but it will get better by 2018-19, although "the biggest question around most companies' value is what will their fleet look like for the next cycle," analyst Gregory Lewis writes.
- The firm maintains Neutral ratings on Ensco (ESV -0.1%) and Diamond Offshore (DO +2.8%), with best in class balance sheets but fleets that are likely to look a lot different next cycle; Atwood Oceanics (ATW -0.4%) also is rated Neutral.
- The firm maintains an Underperform rating on Transocean (RIG -0.8%), owing to its balance sheet and fleet mix, while keeping Outperform ratings on Rowan (RDC +0.8%) and Noble Corp. (NE +0.8%)
Tue, Sep. 1, 6:57 PM
- Diamond Offshore (NYSE:DO) is upgraded to Market Perform from Underperform along with the overall offshore drilling segment at Wells Fargo to reflect valuations below net asset value and the potential for an underappreciated demand profile in a recovery scenario in 2017-18.
- But it is hardly a ringing endorsement, as the firm also cut its offshore drilling earnings estimates by 10%-40% for 2016 and 20%-60% for 2017 to primarily reflect likely 5%-15% reductions in floater dayrates and 10%-20% reductions in jack-up dayrates as well as updated idling/stacking assumptions across each fleet.
- For DO, the firm believes the downside risk for the company’s fleet is largely priced in, and that DO’s free cash flow and strong balance sheet relative to the industry suggests more of a neutral outlook than meaningful downside risk.
- Wells' move hardly helped today's stock results in the sector, which were sharply lower: DO -4.2%, RIG -3.5%, SDRL -6.3%, ESV -5.5%, NE -2.4%, ATW -4.5%, RDC -2.1%, ORIG -6.3%.
- At the same time, Wells downgraded land drillers Pioneer Energy (NYSE:PES), RPC Inc. (NYSE:RES) and Patterson-UTI (NASDAQ:PTEN) to Market Perform from Outperform.
Wed, Aug. 26, 10:46 AM
- Transocean (RIG -3.3%) opens down but off premarket lows following news of its plans to suspend dividend payouts and book 2B Swiss francs ($2.1B) in asset impairments; other offshore drilling contractors trade mixed.
- Raymond James says RIG's move is prudent given the difficulties facing the offshore drilling market: "All in on an annual basis, the cancellation of the dividend would result in $220M in retained liquidity... We view this as prudent as [RIG] can use the cash to improve its own liquidity or work to eventually high grade its fleet."
- Cowen notes the decision comes as somewhat of a surprise, since the dividend had been approved by shareholders last May, and adds the move could be seen as an indication that the market has grown incrementally worse in just the three weeks since RIG Aug. 6 earnings call.
- Offshore peers: DO +1.2%, SDRL +2.2%, ESV +0.3%, RIGP +0.3%, RDC -0.1%, ATW -0.2%, NE -2.2%, VTG -4.3%, ORIG -1.5%, PACD flat.
Tue, Aug. 25, 11:10 AM
- Moody's places 11 offshore drilling companies under review for a downgrade, citing concerns regarding "an extremely challenging operating environment through at least 2017."
- The ratings agency expects oil prices to remain volatile and rise minimally through 2017, meaning the energy producers that hire offshore drillers will remain under pressure to keep a lid on spending.
- "Sustained weak crude oil prices and a steady supply of newbuild rigs will cause significant credit erosion as contracted backlogs, revenues and cash flows continue to fade," Moody's writes, and "fewer offshore drilling opportunities will be available, resulting in a potentially prolonged period of lower dayrates and fleet utilization."
- The companies under review are DO, ESV, NE, RDC, RIG, ATW, SDLP, ORIG, PGN, PACD and Shelf Drilling Midco.
Thu, Aug. 13, 10:30 AM
- Offshore drilling stocks could see further downside despite already falling ~30% in two months, Barclays analysts say, expecting offshore spending to decline by double digits again in 2016 as operators wait for signs of oil price stability and lower development costs before committing resources.
- The firm says floater retirements have stalled, with 38 retirements since last October but only three since June, making little headway for the 60-70 additional floater retirements the industry needs to rebalance the market.
- The firm downgrades Atwood Oceanics (ATW -7.3%) to Underweight from Equal Weight with an $18 price target from a previous $27, and maintains Underweight ratings on Diamond Offshore (DO -3.7%), Noble Corp. (NE -6.7%) and Ocean Rig UDW (ORIG -6.2%); Ensco (ESV -5.2%), Pacific Drilling (PACD -5.2%) and Rowan (RDC -6.3%) are maintained with Equal Weight ratings.
Thu, Jul. 30, 6:28 PM
- Negative sentiment continued to overwhelm offshore drillers in today's trade, as Ensco (NYSE:ESV), Noble Corp. (NYSE:NE) and Atwood Oceanics (NYSE:ATW) all failed to hold early morning gains despite posting reasonably solid Q2 earnings results.
- J.P. Morgan said it had expected a positive session for ESV after results beat forecasts across the board, as the company executed well and costs dropped 8% Q/Q despite several rig reactivations and newbuild commencements.
- Cowen analysts said NE also beat Q2 expectations, and believes the company can "certainly cover the dividend for now," given significant cash flow generation in 2015 and solid contract coverage through 2016.
- ATW also edged past earnings estimates for the fifth straight quarter, as drilling revenue fell 6% Q/Q and rose 20% Y/Y, though drilling expenses of $134M were at the high-end of guidance.
- The sector finished broadly lower: ESV -7.6%, NE -3.7%, ATW -3%, RIG -3.5%, SDRL -2.8%, DO -3.2%, RDC -2.7%, PACD -3.8%.
Other News & PR