Oct. 9, 2015, 4:37 PM
- The Zephirin Group sees "little risk in going long” offshore drillers such as Transocean (NYSE:RIG), Ensco (NYSE:ESV), Rowan (NYSE:RDC), Noble (NYSE:NE) and Diamond Offshore Drilling (NYSE:DO), given that the shares have been "bleeding out" since the beginning of the year.
- The firm believes investors are accepting the realities of soft demand, day rate and utilization rate - and management should be applauded for navigating the past three difficult quarters - and have zero conviction on the offshore drilling outlook for 2016.
- With plenty of bargains available, Zephirin recommends building a position in the sector's best stocks - RIG, ESV, RDC, NE and DO - in the current final leg of 2015.
Oct. 8, 2015, 4:58 PM
- KeyBanc analysts contend that six offshore drillers - Diamond Offshore Drilling (NYSE:DO), Ensco (NYSE:ESV), Noble (NYSE:NE), Transocean (NYSE:RIG), Rowan (NYSE:RDC) and Hornbeck Offshore Services (NYSE:HOS) - should be well positioned to lead in an industry recovery.
- The six are responding to the downturn by aggressively cutting costs, building cash, retiring and scrapping their oldest rigs, and defending the value of their contract backlogs in the face of customer requests for renegotiations of contract terms and provisions; "when the dust settles, [they] should be well positioned and ready to lead in an industry recovery," KeyBanc writes.
- But the firm says it is too soon to invest in a prospective industry rebound when the companies are still reporting a steady stream of bad news amid declining demand for all classes of offshore rigs, thus the six companies only merit Sector Weight ratings.
Oct. 8, 2015, 12:22 PM
- Transocean (RIG -2%) loses its investment grade status at Fitch Ratings, which downgrades RIG’s long-term issuer default rating and senior unsecured ratings to BB+ from BBB-.
- Fitch says the downgrade reflects its view that the combined effects of weak oil prices and an offshore rig oversupply cycle brings higher revenue risk probably resulting in “leverage metrics exceeding Fitch’s through-the-cycle levels over the rating horizon."
- The ratings agency notes that iRIG has taken many actions to protect credit quality, and views the company as an eventual consolidator that will enhance its long-term competitive position and credit prospects.
- Earlier: Offshore drillers stung by Ocean Rig update
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)
Oct. 5, 2015, 5:41 PM
Sep. 30, 2015, 5:36 PM
Sep. 28, 2015, 6:19 PM
- Transocean (NYSE:RIG) is upgraded to Hold from Sell at Deutsche Bank, which believes the company - with a new management team in place - is in position to take radical restructuring measures that could include re-capitalizing the balance sheet and scrapping up to 40 rigs.
- While Deustche Bank was feeling a little better about RIG, Susquehanna sticks with its Negative outlook and $11 price target even while raising its estimates for the beaten-down driller; despite RIG’s attempt to lower costs and operate under a smaller scale, the firm sees the challenging market dictating RIG's outlook for at least the next two years amid an environment of muted demand and rig oversupply.
- It was a rough day for offshore drillers: RIG -4.7%, ESV -6.3%, RDC -2.4%, DO -5.2%, ATW -5.7%, NE -4.3%, SDRL -8.9%, ORIG -6%, PACD -11.5%.
Sep. 25, 2015, 6:41 PM
- With Transocean (NYSE:RIG) now caught up in the Petrobras (NYSE:PBR) corruption investigation, Credit Suisse examines the offshore drillers with exposure to the Brazilian company and finds Diamond Offshore (NYSE:DO) and Seadrill (NYSE:SDRL), among others.
- Since 2007, PBR has contracted ~100 rigs from 21 operators for drilling services for a total backlog of $48B; the company's top five drilling contractors over the period were Brazil's Odebrecht and DO with 15% market share, followed by RIG (13%), Brazil's QGOG (12%) and SDRL (11%); other drillers taking backlog include Ensco (ESV, 9%), Noble (NE, 8%), Ocean Rig UDW (ORIG, 6%) and Vantage Drilling (VTG, 3%).
- PBR is reducing its drilling fleet as part of a wider effort to cut spending, and so far this month has canceled at least two rig contracts and five platform supply vessel contracts.
- Earlier: Transocean denies wrongdoing in Petrobras case, shares -3.3%
Sep. 25, 2015, 10:35 AM
- Transocean (RIG -3.3%) confirms being mentioned in the Petrobras (PBR -1.2%) Brazilian corruption probe, but says it has not identified wrongdoing by any employee or any of its agents in connection with the company's business.
- RIG notes that no one mentioned in the investigation actually worked for the company, and that the witness said no such payments were necessary as the company had been awarded the contract for the Petrobras 10000 ultra-deepwater drillship after winning the bid in a competitive process.
- Cowen analyst J.B. Lowe says any attempt by PBR to cancel contracts it has with RIG in the wake of the testimony would of course be viewed as a negative, but he estimates the Petrobras 10000 represents just ~3% of RIG’s backlog, and the backlog from all five rigs currently under contract with PBR totals less than 7%.
- Earlier: Transocean linked with Petrobras corruption investigation (Sep 24)
Sep. 24, 2015, 3:53 PM
- Transocean (RIG -5.7%) plunges after the company is linked for the first time to the Petrobras (PBR +3.3%) corruption probe.
- A former PBR executive has testified to receiving what he says were payments made by someone claiming to be a RIG agent in exchange for a rig-operation contract from PBR, according to a Bloomberg report.
- The witness said he was offered the alleged RIG payments by an assistant to the former head of PBR’s international division, according to a newly published transcript of Aug. 26 testimony.
Sep. 15, 2015, 5:42 PM
Sep. 4, 2015, 5:36 PM
Sep. 3, 2015, 5:36 PM
Sep. 3, 2015, 3:44 PM
- Credit Suisse downgrades Seadrill (SDRL -1.4%) to Underperform from Neutral with a $5 price target, cut from a previous $7, and Pacific Drilling (PACD +0.5%) to Neutral from Outperform with a $3 target, down from $4 earlier, while maintaining an Underperform rating on the overall offshore drilling sector.
- The sector "will get worse before getting better," but it will get better by 2018-19, although "the biggest question around most companies' value is what will their fleet look like for the next cycle," analyst Gregory Lewis writes.
- The firm maintains Neutral ratings on Ensco (ESV -0.1%) and Diamond Offshore (DO +2.8%), with best in class balance sheets but fleets that are likely to look a lot different next cycle; Atwood Oceanics (ATW -0.4%) also is rated Neutral.
- The firm maintains an Underperform rating on Transocean (RIG -0.8%), owing to its balance sheet and fleet mix, while keeping Outperform ratings on Rowan (RDC +0.8%) and Noble Corp. (NE +0.8%)
Sep. 1, 2015, 6:57 PM
- Diamond Offshore (NYSE:DO) is upgraded to Market Perform from Underperform along with the overall offshore drilling segment at Wells Fargo to reflect valuations below net asset value and the potential for an underappreciated demand profile in a recovery scenario in 2017-18.
- But it is hardly a ringing endorsement, as the firm also cut its offshore drilling earnings estimates by 10%-40% for 2016 and 20%-60% for 2017 to primarily reflect likely 5%-15% reductions in floater dayrates and 10%-20% reductions in jack-up dayrates as well as updated idling/stacking assumptions across each fleet.
- For DO, the firm believes the downside risk for the company’s fleet is largely priced in, and that DO’s free cash flow and strong balance sheet relative to the industry suggests more of a neutral outlook than meaningful downside risk.
- Wells' move hardly helped today's stock results in the sector, which were sharply lower: DO -4.2%, RIG -3.5%, SDRL -6.3%, ESV -5.5%, NE -2.4%, ATW -4.5%, RDC -2.1%, ORIG -6.3%.
- At the same time, Wells downgraded land drillers Pioneer Energy (NYSE:PES), RPC Inc. (NYSE:RES) and Patterson-UTI (NASDAQ:PTEN) to Market Perform from Outperform.
Aug. 31, 2015, 3:49 PM
- West Texas crude oil surged 8.8% to $49.19/bbl, capping a three-day rally that added more than 27% to the price - the largest three-day rally since January 2009 - after U.S. oil production data showed output falling and OPEC said it would talk with other producers about low prices.
- Brent crude rallied 7.4% to $53.80, as the spread between the two benchmarks widened to more than $5 intraday after narrowing to $4.33.
- "Oil markets are hungry for any evidence of a fall in production, anywhere,” says Global Hunter's Robert Hastings.
- The SPDR Energy ETF (XLE +1.2%) jumped after being down as much as 2.5% early in the day, and the Market Vectors Oil Services ETF (OIH +2.3%) reversed a 2.6% loss at its intraday low.
- However, trading volumes were lower and volatility perhaps greater than usual due to a U.K. holiday.
- Andrew Keene tells CNBC he is selling today's pop, noting that XLE is again trading at its 20-day MA and "we haven't traded above this moving average since May."
- Among the shares of some of the more active energy companies, Chevron (CVX +0.5%) and Exxon Mobil (XOM +0.4%) are higher after respective early losses of 3.1% and 2.4%; also, COP +5%, PSX +2.6%, SLB +2.2%, RIG +4.1%, HAL +2.4%, WLL +8.3%, MRO +3.4%, NFX +5.1%, LINE +5.7%.
- Other ETFs: VDE, ERX, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Transocean Ltd. provides offshore contract drilling services for oil and gas wells. The company operates through Contract Drilling Services segment. The Contract Drilling Services segment comprises mobile offshore drilling fleet, related equipment and work crews primarily on a day rate basis to... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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