Diamond Offshore Drilling Inc.NYSE
Tue, Oct. 11, 7:55 AM
- BP says it is abandoning plans to drill deepwater oil exploration wells off in the Great Australian Bight, deciding that the project would not be able to compete for capital investment against other upstream opportunities.
- BP says the decision to drop the project off Australia's southern coast in an environmentally sensitive area was not influenced by regulatory delays, but it had faced strong opposition from environmental groups that warned of potential spills on the scale of the 2010 Deepwater Horizon disaster.
- BP says it made the move following discussions with Statoil (NYSE:STO), its joint venture partner in the region.
- BP is now looking for other work for the Ocean GreatWhite semi-submersible drilling rig that was contracted from Diamond Offshore (NYSE:DO) in 2013; BP says the decision to quit the Great Australian Bight project does not impact the rig contract.
Tue, Sep. 27, 5:28 PM
- Coty (COTY +0.3%) is heading to the S&P 500, replacing Diamond Offshore Drilling (DO -0.4%) in that index. Diamond Offshore is off 1.3% after hours, while COTY is up 0.4%.
- Diamond Offshore will move to the S&P MidCap 400, replacing Polycom (NASDAQ:PLCM), which has been acquired by Siris Capital Group. The contract driller was ranked at the bottom of the 500 and now has a market cap more reflective of a mid-cap, S&P Dow Jones Indices says.
- The moves are effective after the close on Friday.
- Meanwhile, Tile Shop Holdings (TTS -0.3%) is replacing Epiq Systems (NASDAQ:EPIQ) in the SmallCap 600, as Omers Private Equity is acquiring Epiq in a deal expected to be completed soon.
Wed, Sep. 21, 3:43 PM
- Diamond Offshore (DO +3.6%) is downgraded to Sell from Neutral with a $10 price target, while Noble Corp. (NE +5.3%) is upgraded to Neutral from Sell with a $4 target, at Goldman Sachs, which foresees weakness in the offshore rig market likely persisting through 2020.
- Goldman says DO is significantly over-earning vs. the spot market, and with key above-market contracts set to expire through 2020, the company’s EBITDA likely will decline by 40% annually vs. 10% for NE, which already has suffered a sharp EBITDA correction.
- The firm expects demand for jack-up rigs to recover before demand for floaters, and DO has the least jack-up exposure within the peer group while NE enjoys significantly higher exposure to jack-ups.
- Evercore ISI recently upgraded DO to Buy amid signs of hope for the offshore rig market.
Tue, Sep. 20, 3:45 PM
- Diamond Offshore (DO +2.4%) is upgraded to Buy from Hold at Evercore ISI, which believes the unwinding of shorts as oil prices firm and an offshore rig market bottom materializes over the next 6-12 months could be a catalyst for offshore drillers.
- The firm notes the recent news that the Rowan Reliance drilling contract may be terminated early - the news was expected but was surprised that the company said an exclusive five-year service agreement could be in lieu of a contract termination; it sees the modified blend-and-extend agreement suggests the operator could see a potential offshore rig market bottoming by March 31 and tightening within the next 12 months.
- Evercore continues to rate Ensco (ESV -1.4%), Rowan ([[RDC] -0.5%) and Noble Corp. (NE -2%) as Buys, "as this select group of offshore drillers will be survivors of the current multi-year cyclical downturn."
Thu, Sep. 1, 2:19 PM
Thu, Aug. 25, 12:27 PM
- Transocean (RIG +1.4%) is upgraded to Neutral from Sell with an $11 price target at Citigroup, which says RIG has exceeded expectations for cost reductions while the backlog remains superior to peers.
- Citi says that while RIG's EBITDA should steadily decline, the company does not face an EBITDA cliff unlike some peers, and the company also was able to issue debt which has lowered bond yields.
- Among offshore drillers, Citi rates Ensco (ESV +0.1%), Diamond Offshore Drilling (DO +0.1%), Noble Corp. (NE -0.6%), Atwood Oceanics (ATW -1.4%), Rowan (RDC -0.6%) and RIG at Neutral, while Pacific Drilling (PACD -2.7%) remains rated a Sell.
Fri, Aug. 12, 5:30 PM
- It's still too early to get involved in offshore drillers, RBC analysts say as they expect the group to continue to underperform through 2017 with the supply overhang requiring years to balance out.
- The firm says drillers will need to continue the current pace of rig retirements and retire an additional ~110 rigs by 2020 to balance the market, another 70 retirements are still needed to balance the floater market, and the jackup market will need ~40 additional retirements over the next four years to reach mid-cycle equilibrium by 2020.
- RBC cuts its price targets for Transocean (NYSE:RIG) to $11 from $14, Diamond Offshore (NYSE:DO) to $23 to $29, Atwood Oceanics (NYSE:ATW) to $11 from $14, Rowan (NYSE:RDC) to $16 from $22, and Noble Corp. (NYSE:NE) to $8 from $11.
Mon, Aug. 1, 6:01 AM
Sun, Jul. 31, 5:30 PM
Wed, Jul. 27, 5:57 PM
- Offshore drilling stocks were slammed today as crude oil prices fell to three month lows, but Atwood Oceanics (NYSE:ATW) took the worst beating, -8.6% following its latest fleet status update.
- The contract for the Atwood Osprey rig, which had been expected to start working for Woodside Energy until January 2017 at a $450K dayrate, was extended but at a new rate of $190K; also, no contracts were announced for two uncontracted, newbuild drillships despite talk of a potential Brazil agreement in the works.
- Also in today's trade: RIG -4.1%, DO -3.1%, RDC -4.6%, ESV -4.7%, SDRL -0.6%, NE -3%.
Fri, Jul. 22, 2:23 PM
- Transocean (RIG -5.5%) falls more than 5% after its latest fleet status report showed it stacked an additional six rigs, taking its total number of currently stacked rigs to 28, with reduced dayrates for others.
- RIG says it won a two-year contract for one of its semi-submersibles to operate off India for ONGC at a $127K dayrate, and a newbuild ultra-deepwater rig started operations on a 10-year contract in the Gulf of Mexico at a $498K dayrate.
- Following the report, RBC's Kurt Hallead says RIG shares have limited upside until the market gains more confidence in the supply and demand outlook for floating rigs in 2017-18. Currently, fundamentals continue to weaken for floating rigs, and it remains unclear where dayrates and utilization may bottom.
- Offshore drillers are broadly lower: RIGP -1%, DO -1.5%, ESV -4.2%, RDC -5%, SDRL -1.6%, NE -4.8%, ATW -3.6%, PACD -3.8%.
Mon, Jul. 11, 3:19 PM
- Transocean (RIG -2.4%) is sharply lower after Seaport Global downgraded its rating to Sell from Neutral with a $10 price target, as valuation "seems stretched... given that little has changed regarding the protracted oversupply of rigs in offshore markets."
- RIG also will have a higher annual cash interest expense burden due to last week's $1.25B unsecured note issuance, Seaport says.
- Offshore drillers are broadly lower as crude oil futures fell 1.4% to a two-month low $44.76/bbl: RIGP -2.2%, SDRL -1.1%, DO -0.3%, ESV -3%, NE -1.1%, RDC -0.4%, ATW -2.6%.
Fri, Jul. 8, 11:46 AM
- GE (GE +1.1%), oil drillers and regulators are scrambling to determine why massive bolts used to connect subsea oil equipment keep failing, causing alarm over the safety of hundreds of wells in the Gulf of Mexico, Dow Jones reports.
- A U.S. investigation and two recent bolt failures have convinced regulators and industry officials that the problem goes beyond GE and its blowout preventers, according to the report; the Interior Department says flaws also have been found in bolts made by National Oilwell Varco (NOV +2.5%) and Schlumberger (SLB +1.3%), and in bolts used in other areas on subsea wells.
- GE says it is working with the Interior Department to address the problems and has supplied replacement parts to customers upon request.
- Companies already have begun the process of finding and replacing corroded bolts; Diamond Offshore (DO +1.9%), which has a fleet of 30 rigs, told investors in June that it had four unplanned “stack pulls” in Q2 with three of the repairs involving failed bolts, interruptions that likely will impact Q2 results.
Tue, Jul. 5, 7:19 PM
- Citigroup reshuffles its rankings a bit among offshore drillers in light of the wide spread in YTD performance that has seen the likes of Ensco (NYSE:ESV) and Noble Corp. (NYSE:NE) suffer sizeable losses while Diamond Offshore (NYSE:DO) and Atwood Oceanics (NYSE:ATW) sport double-digit gains.
- The firm ranks ESV at Neutral but nevertheless atop the group given its YTD underperformance (-37%) and balance sheet improvement through its April debt tender, while DO ranks second given backlog into 2019 and healthy balance sheet, and ATW is a close third as short covering could fuel further upside.
- Citi says Rowan (NYSE:RDC) has slipped to the bottom of its Neutral-rated stocks in the group on YTD outperformance (+4%), risk of contract cancellation and an EBITDA cliff in 2018; the firm continues to rate Transocean (NYSE:RIG) and Pacific Drilling (NYSE:PACD) at Sell.
Tue, Jun. 28, 3:28 PM
- Ensco (ESV +5.9%) surges after Susquehanna upgrades shares to Neutral from Negative, citing recovering crude oil prices and the stock's valuation and relative underperformance; of course, rising crude prices today also are helping.
- The firm says higher crude prices has not sparked improved demand for offshore rigs, and it could take through 2018 before any material demand potentially arises, but ESV has underperformed other offshore drillers by a wide margin and now trades below the average for offshore drillers.
- But Evercore ISI remains cautious on offshore drillers, arguing that "not a single stock screens 'cheap,'" although it prefers ESV, Noble Corp. (NE +1.2%) and Rowan (RDC +3.5%) as relative Buys for their superior fleet quality, low operating cost basis, low capex and solid backlog, while Hold-rated Ocean Rig UDW (ORIG +3.6%) and Diamond Offshore (DO +1.8%) deserve "a degree of valuation differentiation due to its highly contracted fleet in the near term."
- Also higher today: RIG +3.9%, ATW +7.1%, SDRL +2.2%, SDLP +12.3%, PACD +2.7%.
Wed, Jun. 8, 7:12 PM
- The recent sharp rally in offshore drillers may be due to short covering, potentially in the midst of a “2 sigma short interest unwind" if oil prices continue to strengthen, according to Evercore ISI analyst James West.
- A portfolio of lower-risk offshore drillers - Atwood Oceanics (NYSE:ATW), Diamond Offshore (NYSE:DO), Ensco (NYSE:ESV), Noble Corp. (NYSE:NE), Rowan (NYSE:RDC) and Transocean (NYSE:RIG) - has been shorted 4.4x their historical average, and a total of 200M shares were short as of May 31 vs. a 50M monthly average during 2005-13, West calculates.
- Short interest as a percentage of the float as of yesterday, according to Markit: ATW 34.5%, DO 20%, RDC 17%, RIG 17%, NE 14%, ESV 3.5%.
- While the firm rates ESV, NE and RDC as relative Buys and believes Hold-rated Ocean Rig UDW (NASDAQ:ORIG) and DO deserve a degree of valuation differentiation, West urges caution on the overall group, seeing the industry as fundamentally oversupplied.