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Yesterday, 12:48 PM
Yesterday, 11:48 AM
- Offshore drillers are on the move today as rising oil prices ease concerns about the difficult market that remains apparent in earnings releases from Noble Corp. (NE +1.1%), which reported last night, and Atwood Oceanics (ATW +17.2%), which reported earlier this week.
- NE reported below consensus Q4 earnings, but Evercore ISI's James West says the company continues to perform well operationally, with YTD unpaid fleet operational downtime edging up slightly to 5% from 4.6% in Q3.
- NE also announced plans to retire two rigs, the drillship Noble Discoverer and jackup Noble Charles Copeland, bringing its total rig attrition to four floaters and one jackup during the oil downturn.
- Jefferies says ATW has the most challenged balance sheet over the longer-term among its mid-cap coverage, but it is encouraged by ATW’s prospects to better position itself for the near-term with a covenant amendment, and maintains its Buy rating with a $9 price target (Q4 earnings).
- Related peers: RIG +3.6%, DO +3.8%, ESV +5.2%, RDC +4.3%, SDRL +2.5%.
Tue, Feb. 2, 5:38 PM
Fri, Jan. 15, 12:49 PM
Wed, Jan. 13, 10:59 AM
- Atwood Oceanics (ATW -2.9%) provides early earnings guidance for its December Q1 because of “unusual market volatility," now seeing EPS of $1.05-$1.20 vs. $0.94 analyst consensus estimate and revenues of $300M-$310M vs. $292M consensus.
- ATW says it is evaluating a potential $50M-$70M impairment adjustment to the valuation of the Atwood Falcon, one of its 11 offshore drilling units, as the rig approaches its scheduled contract end date.
- ATW will report its finalized quarterly results on Feb. 2.
Mon, Jan. 11, 5:47 PM
- Microsemi (NASDAQ:MSCC) will replace Atwood Oceanics (NYSE:ATW) in the S&P MidCap 400 after the close on Friday, the same day the company's $2.5B purchase of PMC-Sierra is expected to close. Atwood will take Microsemi's spot in the S&P SmallCap 600.
- MSCC +2% after hours to $31.47. Shares rose 6.4% in regular trading after Microsemi hiked its Q4 sales guidance and announced the PMC deal is expected to close in four days. Atwood is currently unchanged after hours.
Mon, Jan. 11, 3:44 PM
- Cowen analysts issue a wave of downgrades and stock price reductions among offshore drilling contractors, as they foresee further downside for the group with oversupply for offshore rigs and vessels lasting through 2018 or perhaps longer if commodities remain depressed.
- Cowen downgrades Atwood Oceanics (ATW -2.2%) and Noble Corp. (NE -4.5%) to Market Perform from Outperform with $10 price targets, both slashed from $18; the firm also cuts its price target on Diamond Offshore (DO -0.5%) to $21 from $24, on Rowan (RDC -4%) to $16 from $22, and on Seadrill (SDRL -4.4%) to $3 from $8.
- The firm says its recent annual survey forecasts a 17% Y/Y drop in 2016 global spending for the sector with a bias to the downside because of the continuing pressure in commodity prices, and expects offshore rig demand to remain anemic with further deterioration in utilization levels and dayrates.
Dec. 28, 2015, 11:45 AM
- WTI crude is down 3.2% to $36.90/barrel, and Brent crude down 2.5% to $36.95/barrel, leaving prices close to 11-year lows. Energy industry firms are among the biggest decliners on a day the S&P is down 0.6%.
- Fears about excess supply appear to be weighing once more. OPEC figures point to a global oil supply glut of more than 2M barrels (over 2% of global demand); a smaller glut is expected next year. Meanwhile, Japanese government data indicates the country's oil product sales fell to a 46-year low in November, and European data suggests the continent's oil product demand growth turned negative in October.
- The biggest casualties include Whiting Petroleum (WLL -9.9%), Oasis Petroleum (OAS -8.2%), Vanguard Natural Resources (VNR -12.5%), Denbury Resources (DNR -8%), SandRidge Energy (SD -8.1%), SandRidge Permian Trust (PER -10.9%), SandRidge Mississippian Trust (SDT -7.5%), U.S. Silica (SLCA -6.2%), Marathon Oil (MRO -6.7%), C&J Energy Services (CJES -8.1%), MV Oil Trust (MVO -9.2%), Bonanza Creek (BCEI -6.4%), Parker Drilling (PKD -7.9%), and Continental Resources (CLR -5.9%).
- Other notable decliners include Kinder Morgan (KMI -5%), Williams Partners (WPZ -4.4%), EOG Resources (EOG -3.4%), Cheniere Energy (CQP -3.6%), SeaDrill (SDRL -3.5%), Encana (ECA -2.8%), Devon Energy (DVN -2.7%), Ensco (ESV -3.8%), Hercules Offshore (HERO -4.7%), Atwood Oceanics (ATW -4.9%), Helmerich & Payne (HP -3.8%), and Pioneer Natural (PXD -2.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Dec. 18, 2015, 3:44 PM
- Atwood Oceanics (ATW -12.1%) is sharply lower after asking Daewoo Shipbuilding for a further delay in the delivery of two newbuild ultra-deepwater drillships by another year.
- ATW says it will make payments of $50M for each drillship, and Daewoo will extend all remaining milestone payments - $94M for the Atwood Admiral and $305M for the Atwood Archer - until their respective delivery dates, now Sept. 30, 2017 and June 30, 2018, respectively.
- Also, RBC Capital lowers its stock price target price for ATW to $14 from $19.
Dec. 4, 2015, 5:44 PM
Dec. 4, 2015, 3:49 PM
- Barclays sees little reason for optimism among offshore drilling contractors despite recent outperformance, particularly in light of recent guidance from major oil companies for dramatically reduced offshore spending in 2016; the firm expects another leg down in stock performance as a lack of contracting activity and a massive oversupply of floaters looks daunting in light of the spending cuts.
- Nevertheless, Barclays upgrades Atwood Oceanics (ATW -5.8%) to Equal Weight from Underweight with an $18 price target, and now considers the stock fully valued after dropping ~23% over the past three months; the firm sees the most downside to Transocean (RIG -3.4%), Diamond Offshore (DO -3.5%) and Noble Corp. (NE -4.6%), while Pacific Drilling (PACD -5.6%) and Ocean Rig UDW (ORIG -4.1%) show the most upside but also come with the most risk with little equity remaining and looming liquidity issues.
Nov. 30, 2015, 2:23 PM
- The "lower for longer" consensus on crude oil prices is overly conservative, and prices will begin bouncing back next year, Guggenheim analysts say as they upgrade the oil services sector to Buy and see plenty of upside for the major players given current market conditions.
- Guggenheim is calling for oil prices to return to $100/bbl by 2018, and sees 10% upside across the board for oil services stocks in the next year resulting from the group's unique exposure to crude prices.
- Within the group, the firm prefers Rowan (RDC +1.8%) and Atwood Oceanics (ATW +1.6%), as their backlogs should help reduce near-term risk, RDC has no newbuild commitments and ATW is finalizing a contract in Brazil for one of its two uncontracted rigs, utilization in the Middle East (NYSE:RDC) and Australia (NYSE:ATW) should be resilient on a relative basis, and both have fleets that make them more interesting M&A candidates.
- Upgraded to Buy from Neutral: CAM, RIG, NE, OII, PACD, DO, ESV, CLB, OIS, HP, NBR, CRR, NOV, DRQ, FI, PTEN, SSE, FTI, CJES, FET, SPN.
Nov. 10, 2015, 12:48 PM
Nov. 10, 2015, 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.
Nov. 5, 2015, 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%.
Oct. 8, 2015, 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)
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