Rowan Q2 Results Show Promising Signs
Rowan Companies: Temporary Growth, Not As Cheap As It Seems
Jeffrey To • 12 Comments
Jeffrey To • 12 Comments
The Cheapest High Growth Stock In The S&P Is... Rowan Companies?!
Jeffrey Dow Jones • 27 Comments
Jeffrey Dow Jones • 27 Comments
Wed, Jun. 22, 7:52 AM
- Workers on Norwegian offshore oil drilling rigs sign a new wage agreement, beating today's deadline and avoiding a strike.
- Nearly 300 rig workers had threatened to strike if the talks failed, including staff on Rowan's (NYSE:RDC) Viking and Gorilla rigs, and on the Statoil-operated (NYSE:STO) Heidrun, Statfjord, Aasgard, Volve and Oseberg fields.
- Workers will get only a small pay raise but those being laid off will have the right for a two-year period to be rehired if an employer increases staffing.
Thu, Jun. 16, 10:02 AM
- Nearly 300 employees on oil and gas drilling rigs off Norway could go on strike unless a labor deal is agreed by June 22, the country's state-appointed mediator says.
- Rowan's (RDC -2.9%) Viking and Gorilla rigs would be affected, according to one of the unions involved in the wage talks; it is not clear if other rigs would be affected.
- The Gorilla rig works for ConocoPhillips (COP -2.8%), which says the rig is engaged in the plugging of abandoned wells on its Ekofisk field in the North Sea and that oil output would be unaffected by a strike; the Viking does work for Swedish oil firm Lundin (OTCPK:LNDNF).
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.
Fri, May 27, 3:56 PM
- Top executives at Rowan Cos. (RDC +1%) agree to a voluntary 10% salary cut starting July 1 as a show of “good faith” during the oil downturn, according to an SEC filing.
- The company’s seven senior officers will see cuts to their base salary as well as stock awards and other benefits that are calculated based on salary.
- RDC CEO Thomas Burke’s base salary in 2015 was $800K, while Executive Chairman Matt Ralls made $700K.
Tue, May 24, 7:58 AM
- Freeport McMoRan's (NYSE:FCX) oil and gas unit agrees to pay $215M to Rowan (NYSE:RDC) to immediately terminate a drillship contract.
- The agreement releases FCX from $300M in further payments under the contract for the ultra-deepwater drillship Rowan Relentless, which has been operating in the Gulf of Mexico.
- RDC also may $30M in additional contingent payments, depending on the average crude oil price over the next 12 months.
- The contract cancellation follows FCX's agreement two weeks ago to pay Noble Corp. $540M, with up to $75M in additional contingent payments, to terminate agreements for two other drillships in the Gulf of Mexico.
- The RDC contract would have ended in June 2017, and the two contracts with Noble had been scheduled to run through July and November 2017.
- FCX +1.5% premarket.
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%.
Wed, May 4, 6:06 AM
Tue, May 3, 5:30 PM
- AFAM, ARCC, ARCO, ARQL, ASC, ATRO, AVA, AYR, BDC, BUD, CDW, CHH, CLH, CPK, CRK, CRL, CRTO, CRZO, CSTE, D, DLPH, DNOW, ECYT, EE, ENR, FUN, GEL, GNRC, GTE, HAIN, HE, HFC, HSC, HSNI, HTWR, HYH, ICE, INXN, IONS, IRT, KATE, KLIC, LGND, MEMP, MFA, MMP, MOS, MPW, MTOR, NBL, NGS, NJR, NRZ, NVMI, NXTM, OMF, ONCE, ORBK, PCG, PCLN, RDC, RDS.A, SBGI, SCMP, SE, SERV, SHOP, SMP, SPAR, SR, SRE, SSTK, STRA, TGH, TGI, TMHC, TREE, TWX, VIRT, VOYA, VSI, WD, WIX, ZTS
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
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
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.
Wed, Mar. 9, 3:23 PM
- Ocean Rig UDW (ORIG -22.9%) plunges after missing Q4 earnings expectations and saying "prospects for the industry remain bleak” and “are likely to remain so at least until 2018.”
- ORIG says it is in discussions with lenders of its loan agreement related to the consequences of Ocean Rig Apollo termination, and that the situation could evolve into a "significant prepayment" of the loan.
- ORIG says its fleet operated at 99.5% utilization during Q4, and FY 2015 fleet operating efficiency was ~98.2%.
- Although ORIG’s comments were more bearish than the outlook described by other offshore drillers, the company’s earnings are hurting other names in the space: DRYS -19.6%, SDRL -16.4%, RIG -2.3%, NE -5.7%, ESV -3.9%, DO -1.4%, RDC -4.4%, ATW -3.3%.
Thu, Mar. 3, 2:58 PM
- Offshore drillers are surging today, which RBC analysts at least partially attribute to Noble Corp.'s (NE +16.1%) news that it spent $200M to buy back bonds due in 2020 and 2021, greatly reducing its debt.
- RBC estimates that NE would be able to retire ~$300M of debt principal at face value for $200M with new borrowings on the revolver, which should generate annual interest savings of ~$10M or a ~$0.03 impact to EPS.
- Ben Levisohn of Barron's also notes that oil companies in general have been able to offer stock and pay down debt, which has reduced some of the fears that the entire sector could go bankrupt, and that short interest in offshore drillers has been high.
- Also: RIG +9.9%, SDRL +11.7%, ESV +13.2%, RDC +10.5%, DO +5.9%, ATW +20%, PACD +42.6%.
Tue, Mar. 1, 10:58 AM
- Moody’s cut the credit ratings of six offshore drillers late Monday, expecting the group to face an extremely challenging operating environment through at least 2018.
- Moody's cuts Ensco (ESV -7.2%) by five notches to B1 from Baa2, saying "earnings and liquidity will decline over time as the company is compelled to rationalize its fleet to adjust to reduced demand conditions."
- Falling four notches were Atwood Oceanics (ATW -8.8%), Noble Corp. (NE -2%) and Rowan (RDC -2.1%); the ratings agency expects ATW to breach a debt covenant in 2017 and says the company is at increased risk of having to restructure.
- Debt ratings falling three notches were Diamond Offshore (DO -0.5%) and Transocean (RIG -1.8%).
Fri, Feb. 26, 6:57 PM
- Shares of offshore drillers gained across the board today, even as Ensco (NYSE:ESV) was downgraded to Underperform at Wells Fargo and Transocean (NYSE:RIG) was maintained with a Sell rating at Evercore ISI.
- Wells Fargo says ESV improved its liquidity by cutting its dividend, and has $1.3B of cash and full availability on its $2.25B revolver, but backlogs were down 40% Y/Y as offshore activity fell and competition intensified, and the industry expects 70 new jackups to come out of shipyards in 2017.
- Evercore ISI’s James West says RIG leads the industry in rig retirements but continues to have the largest fleet of the offshore drillers, and thus still has a lot of work to do before he removes his Sell rating.
- Rowan (NYSE:RDC) offered two nice surprises in its Q4 results, securing a one-year contract for the Ralph Coffman HS Jackup at a $135 dayrate, and reporting a gain on the sale of Rowan Louisiana, which had been impaired to scrap value.
- In today's trade: ESV +6.7%, RIG +5.1%, RDC +9.9%, DO +4.2%, SDRL +3.8%, ATW +4.2%, NE +9%.
Fri, Feb. 26, 6:02 AM
Rowan Cos. Plc engages in the business of providing international and domestic offshore oil and gas contract drilling services. The company focuses on high specification and premium jack-up rigs, which are used for exploratory and development drilling operations. It conducts offshore drilling... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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