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
George Rho • 52 Comments
George Rho • 52 Comments
Discussion Of A Long-Term Investment In Ensco Plc
Pedro de Almeida • 43 Comments
Pedro de Almeida • 43 Comments
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
- ACGL, AEL, AF, ALGT, AMKR, AMP, ANIK, AR, ASGN, AVB, AVG, BCR, BGC, BKCC, BLKB, CACI, CAKE, CAVM, CBL, CDE, CGI, CLI, CMO, CMPR, CNMD, CNO, CRY, CSGP, CVTI, DGI, DLB, DMRC, DRE, DTLK, DWRE, DXCM, ECHO, EFX, ELY, EQY, ESRT, ESV, EXTR, FB, FIX, FNF, FORM, FORR, FR, FSLR, GG, HOLX, HTCH, HY, IBKC, INFN, IPHS, KEX, KIM, KRA, KRC, KS, LLNW, LOCK, LOGI, LQ, MANT, MAR, MC, MEOH, MMLP, MN, MSTR, MTGE, NE, NEU, NGD, NTGR, NVDQ, OIS, ORLY, OTEX, PEB, PPC, PRXL, PYPL, QDEL, QEP, QGEN, RCII, RGLD, RNG, ROIC, SCI, SFLY, SGI, SIMO, SNDK, SPRT, SSS, STR, TAL, TER, TILE, TS, TTEK, TTMI, TXN, TYL, UHS, UNM, VAR, VRTX, WCN, WIRE, WLL, WRE, WSR, XL, XLNX
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.
Thu, Apr. 14, 5:40 PM
Thu, Apr. 14, 4:30 PM
- Ensco (NYSE:ESV) -6.5% AH after announcing a public offering of 50M common shares, with an underwriters option to purchase up to an additional 7.5M shares.
- ESV says it plans to use the proceeds for general corporate purposes.
- Now read How to earn a higher than 10% annual return with Ensco
Thu, Apr. 14, 3:30 PM
- The Obama administration announces new oil well control rules aimed at preventing the kind of blowout that happened in the 2010 Gulf of Mexico oil spill.
- The regulations announced by the Interior Department tighten requirements for blowout preventers, well design, well control casing, cementing and sub-sea containment, and call for real-time monitoring, third-party reviews of equipment, regular inspections and safe drilling margin requirements.
- The effects will be particularly acute for the Gulf’s top crude oil and gas producers, Royal Dutch Shell (RDS.A +1.1%), BP (BP -1.6%), Chevron (CVX +0.1%) and Exxon Mobil (XOM +0.4%); XOM says the new rules will cost $25B over 10 years and render many offshore discoveries worthless.
- Offshore drilling stocks are broadly lower on the news: RIG -6.1%, DO -1.4%, ESV -5.1%, RDC -7.3%, NE -5.4%, ATW -9%, SDRL -8.9%, SDLP -4%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN
Wed, Apr. 13, 8:39 AM
- Ensco (NYSE:ESV) cold stacks two more rigs and sees at least three contracts get shortened, according to its latest fleet status report.
- ESV says it won a six-month rig contract with Chevron at a dayrate in the $120Ks, and sold one of its semisubmersible rigs for $1M to an undisclosed client.
- ESV says it disagrees with bribery allegations claimed by Petrobras when it cut a rig contract in January, and it continues negotiations with the Brazilian company over four floaters currently under contract.
- Now read Ensco: Complete fleet analysis
Tue, Apr. 5, 6:18 PM
- The best way to play uncertainty in the energy sector could be pair trading, Oppenheimer technical analyst Ari Wald suggests.
- “Our top-down process stresses buying the best of the best and selling the worst of the worst, and we accordingly still recommend an Overweight position in U.S. large-caps from a global equity allocation viewpoint," Wald writes; as applied to energy, that means investors should buy integrated oil stocks and sell struggling drilling stocks.
- Oppenheimer recommends buying leading integrated oil stocks Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), with drillers Ensco (NYSE:ESV) and Transocean (NYSE:RIG) as the top potential pair trade candidates.
- Now read Oppenheimer's top picks to play stationary energy storage: TSLA, JCI, IPWR
Mon, Mar. 28, 3:19 PM
- Ensco (ESV +1.2%) and Atwood Oceanics (ATW +3.3%) are both downgraded to Underweight from Equal Weight at Barclays, which now does not expect the offshore oil drilling market to recover until early 2018, pushing out recovery assumptions from its previous estimate of early 2017.
- Even if oil prices increase to $50/bbl by year-end, large oil companies will concentrate on improving their balance sheet and will avoid undertaking new offshore projects for several quarters, Barclays believes.
- The firm sees only 25% of rigs being recontracted over the next 18 months, predicting that ESV shares will tumble to $7 and ATW to $6 from current levels; Transocean also is rated Underweight (RIG -0.7%).
- ESV also was cut to Sell at Susquehanna, but shares have remained higher for most of the day.
Mon, Mar. 28, 11:38 AM
- Ensco (ESV +0.3%) is downgraded to Sell from Neutral with an $8 price target at Susquehanna, after shares have rallied 35% since its recent multi-year low in February.
- The firm believes the offshore drilling sector will be highly challenged over the next few years with a massive oversupply of rigs, and even if crude prices recover to a point where drilling activity resumes in the next 12-18 months, it sees spending being directed much more towards onshore drilling and production than offshore.
- Susquehanna says ESV is one of the most expensive companies it covers in the sector, at 14.4x 2018 EBITDA vs. 12.2x for peers, and does not believe the company's asset quality or contract coverage in 2018 and beyond justify the stock’s rich valuation.
Thu, Mar. 24, 5:43 PM
- Hologic (NASDAQ:HOLX) is replacing Pepco Holdings (was just acquired by Exelon), and Centene (NYSE:CNC) will replace Ensco (NYSE:ESV), in the S&P 500 after Tuesday's close. (Press Release - .pdf)
- Abiomed (NASDAQ:ABMD) will take Hologic's spot in the S&P MidCap 400, and Ensco will take Centene's spot. First Industrial Realty Trust (NYSE:FR) will replace Health Net (just acquired by Centene) in the 400.
- ServisFirst Bancshares (NASDAQ:SFBS) will replace National Penn Bancshares (about to be acquired by BB&T) in the S&P SmallCap 600 after the April 1 close. Banc of California (NYSE:BANC) will take Abiomed's spot in the 600.
- HOLX +2% after hours. CNC +1.6%. FR +3.5%. BANC +3.5%. ESV -0.5%.
Mon, Mar. 14, 2:20 PM
- Don't throw in the towel on the entire group of offshore drillers, Seaport Global says, as the firm sees “deep value” in Diamond Offshore (DO -0.9%), Noble Corp. (NE -1.6%) and Rowan (RDC +0.8%).
- DO, NE and RDC boast capital structures that are sustainable into the next decade, with fleets well suited to meet future needs or that can be upgraded through distressed asset acquisitions, Seaport says; even assuming minimal new rig demand in 2018, the firm says the companies can manage through the downturn and emerge unscathed against wounded competition when offshore drilling resumes.
- However, Seaport withdraws its previous Neutral ratings on Hercules Offshore, Ocean Rig UDW (ORIG -2.5%), Pacific Drilling and Seadrill (SDRL -2.7%), and reiterates Reduce ratings on Atwood Oceanics (ATW +2.2%), Ensco (ESV -1.5%) and Transocean (RIG +0.6%) to reflect their uncertain liquidity in a downturn likely to extend into 2018.
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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