Ensco PLC: Valuation And Financial Strength Make It A Compelling Buy
Tim Travis • 39 Comments
Tim Travis • 39 Comments
Ensco Offers A Fat Dividend Yield Plus Much More
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George Rho • 52 Comments
Discussion Of A Long-Term Investment In Ensco Plc
Pedro de Almeida • 43 Comments
Pedro de Almeida • 43 Comments
Today, 4:49 PM
- Stone Energy (NYSE:SGY) +6.4% AH after announcing the termination of its existing long-term deepwater rig contract with Ensco (NYSE:ESV) for $20M; the ENSCO 8503 deepwater rig contract was at a dayrate of $341K and was scheduled to expire in August 2017.
- Additionally, SGY says it entered into an interim gas gathering and processing agreement with Williams Cos. (NYSE:WMB) at the Mary field in Appalachia, which SGY says provides near-term relief by permitting it to resume production at the Mary field.
Today, 3:35 PM
- Transocean (RIG +5.1%) is upgraded to Hold from Sell with a $12 price target, raised from $11, at Evercore ISI, which says it is optimistic that the company has the management team to lead it out of the current downturn, and that earnings visibility and the balance sheet should improve shortly.
- The firm notes that RIG has enjoyed some success in securing new contracts, and some potential blend-and-extends are expected to be finalized shortly, but dayrates likely are at or near cash breakeven levels and RIG still needs to take additional steps to right-size its fleet.
- Evercore rates offshore drilling peers Ensco (ESV +3.3%), Noble Corp. (NE +2.4%) and Rowan (RDC +0.8%) at Buy, while Seadrill (SDRL +0.9%) and North Atlantic Drilling (NADL +0.7%) are rated Sell.
Yesterday, 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. 22, 5:36 PM
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.
Mon, May 23, 2:59 PM
Mon, May 16, 4:58 PM
- Offshore driller Ensco (NYSE:ESV) says it will stack three drillships and a semisubmersible rig, resulting in a reduction of 350 offshore jobs in Texas.
- ESV says it will stack its Ensco DS-3, Ensco DS-4 and Ensco DS-5 drillships, along with the Ensco 8500 semisubmersible rig.
- As of Feb. 24, ESV had 6,400 employees worldwide, the majority working on rig crews.
Fri, May 6, 6:45 PM
- Atwood Oceanics (NYSE:ATW) soared by fully a third in today's trade following a stellar Q1 earnings report driven by a combination of cost cutting and debt repurchases.
- ATW says Q1 drilling costs fell across all three of its asset classes, with costs in ultra-deepwater, deepwater and jackup fleets down by a respective 20.6%, 40.6% and 36.7% Y/Y.
- ATW also repurchased $13.4M in principal of its senior notes for $5.1M to recognize an $8.4M gain, which boosted Q1 EPS by $0.13; ATW says repurchases continued in April, taking out another $140.7M in principal for $94M.
- But Schaeffer's Research notes that some of today's rally could be the result of short-covering, as 43% of ATW's float is sold short.
- Other offshore drilling contractors, which also have been reporting better than expected earnings, finished with strong gains: RIG +6.2%, PACD +5.3%, DO +4.7%, ESV +4.7%, RDC +4.4%, NE +3.9%, but SDRL -3.4%.
Fri, May 6, 8:58 AM
- Drilling contractor Ensco (NYSE:ESV) says Petrobras (NYSE:PBR) has terminated contracts for two rigs, prompting it to permanently retire the pair in another sign of the weak state of the oil market.
- ESV says one rig had its term extended to December 2019 but its dayrate was cut to $240K, while another rig will still run to June 2018 but its dayrate was reduced to $275K; total backlog loss is $140M, as previously disclosed.
- Now read Ensco lost two contracts
Mon, May 2, 3:45 PM
- Diamond Offshore (DO +1.4%) is higher after Q1 earnings easily exceeded analyst estimates, but it is not helping shares of other oilfield services companies in today's trade.
- Wells Fargo views DO's report positively, although results likely included noise from the accounting of a demobilization fee and notes that another contract termination in Mexico could be viewed as a partial negative offset.
- The Zephirin Group contends that DO's do not overshadow weak fundamental conditions in the offshore industry likely to persist, hurting earnings through 2018 and beyond for the likes of Noble Corp. (NE -2%) and Ensco (ESV -3.2%), which reported earnings last week (I, II).
- Zephirin rates NE and ESV at Hold - High Risk, forecasting a 30% reduction in dayrates for NE's Sam Croft and Tom Madden drillships and rate reductions of up to 25% or termination in the near future for ESV's four rigs working in Brazil for Petrobras at a day rate range of $300K-345K.
- Also: RIG -0.7%, RDC -1.4%, ATW -0.7%.
- Now read Diamond Offshore names Youngblood as new CFO
Wed, Apr. 27, 4:38 PM
Tue, Apr. 26, 5:35 PM
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Mon, Apr. 18, 6:53 PM
- Moody's (NYSE:MCO) has emerged as a new problem for energy companies, as the bond rater has deprived 19 energy companies of their investment-grade ratings this year, and has dropped some by several notches into the deeper reaches of junk territory, WSJ reports.
- At the same time, Standard & Poor’s rates only four of the 19 companies that lost an investment-grade rating at Moody’s as below investment grade, while Fitch rates just two below investment grade.
- So far, the market has largely shaken off the Moody’s reassessment of the oil sector; for example, Anadarko Petroleum (NYSE:APC) was cut by Moody's to junk status but still managed to raise large sums in the bond market last month at favorable terms vs. what it would have needed to pay a month earlier.
- Nevertheless, companies that Moody’s has dropped to junk are in a vulnerable position because they need investment-grade ratings from two of the three ratings firms to remain in the Barclays investment-grade corporate bond index and thus retain access to a large pool of investors that are not allowed to invest in bonds outside of the index.
- Among other oil companies Moody's has downgraded this year: ECA, ENLK, ESV, CVE, MUR
Mon, Apr. 18, 1:03 PM
- Deutsche Bank upgrades Ensco (NYSE:ESV) to Hold from Sell.
- Price target goes to $9 from $5. Implied downside 11%.
- Late last week, ESV announced an equity offering expected to raise $525M.
- "Although we did not necessarily expect an offering from ESV given its already strong balance sheet, we did (and continue to) believe this is exactly the kind of action needed to restore the offshore drilling industry to health.
- "The company is now positioned to lead much needed consolidation. However, the current mixed outlook leaves us with a HOLD rating.
- "Should the industry follow suit, it could lead to a harder line on pricing which, in turn, could bring about price discovery on assets/ M&A and help put a floor under the stocks."
- ESV’s actions are consistent with our view that in order for the industry to survive, industry leaders needed to shore up their balance sheets and aggressively retire older assets which would put a floor under dayrates/asset values and help facilitate consolidation. We thought the floater companies would be the first movers given the more distressed balance sheets and the segment would be easier to consolidate.
- Deutsche Bank's top picks in the oil-services industry:
- HAL - price target $40. "HAL's ability to deliver value by driving customer unit costs lower through technology and efficiencies will become increasingly important during the downturn."
- BAS - price target $3. "Basic's high exposure to completion/production will allow the company to benefit from the growing backlog of drilled but uncompleted wells."
- KEG - price target $1. "KEG's production leveraged businesses should hold up better than overall drilling activity and also recover sooner when oil fundamentals return to balance."
- SPN - price target $15. "SPN is a uniquely positioned mid cap diversified service provider. Its product mix drives high, through-cycle margins relative to peers, which will allow it to lower pricing to protect market share during the downturn."
Fri, Apr. 15, 9:13 AM
Fri, Apr. 15, 8:28 AM
- Ensco (NYSE:ESV) discloses preliminary Q1 financial results, and revises its planned 2016 capex to $400M.
- ESV expects Q1 operating revenues of $812M-$817M vs. $788M analyst consensus, benefiting from better than expected 64%-66% fleet utilization and average dayrates that fell by 3%-4% instead of a 7%-8% decline in its prior guidance.
- ESV -7.7% premarket following yesterday's announcement that it will begin a public offering of 50M Class A ordinary shares.
- Update: ESV upsizes its public offering to 57M shares, priced at $9.25M, with an underwriters option to purchase up to an additional 8.55M shares.
Ensco Plc provides offshore drilling services to the petroleum industry. The company provides drilling services to major international, government-owned and independent oil and gas companies. It operates its business through the following segments: Floaters, Jackups and Others. The Floaters... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United Kingdom
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