Rupert Hargreaves • 23 Comments
Street Smart Investor • 24 Comments
Aug. 26, 2015, 10:46 AM
- Transocean (RIG -3.3%) opens down but off premarket lows following news of its plans to suspend dividend payouts and book 2B Swiss francs ($2.1B) in asset impairments; other offshore drilling contractors trade mixed.
- Raymond James says RIG's move is prudent given the difficulties facing the offshore drilling market: "All in on an annual basis, the cancellation of the dividend would result in $220M in retained liquidity... We view this as prudent as [RIG] can use the cash to improve its own liquidity or work to eventually high grade its fleet."
- Cowen notes the decision comes as somewhat of a surprise, since the dividend had been approved by shareholders last May, and adds the move could be seen as an indication that the market has grown incrementally worse in just the three weeks since RIG Aug. 6 earnings call.
- Offshore peers: DO +1.2%, SDRL +2.2%, ESV +0.3%, RIGP +0.3%, RDC -0.1%, ATW -0.2%, NE -2.2%, VTG -4.3%, ORIG -1.5%, PACD flat.
Aug. 7, 2015, 12:45 PM
- Petrobras (PBR -5.1%) has spiraled downward since the open, now more than 5% lower after reporting a 90% Q/Q drop in net profit to 531M, far worse than expected, from 5.33B in Q1 and far below 4.96B earned a year ago.
- PBR says it will seek all necessary authorizations from securities industry regulators for an IPO of its fuel distribution unit, but that whether the IPO goes ahead will depend on global and domestic market conditions.
- In today's earnings conference call, the company said it cut its offshore subsalt field extraction costs to $8/bbl from $9.
- In the latest scandal news, Brazilian prosecutors yesterday presented formal charges against the former head of the company's international division, saying Vantage Drilling (VTG +6.1%) was favored in a rig contract.
Jun. 23, 2015, 2:32 PM
- Vantage Drilling (VTG -22.3%) sinks to new all-time lows after S&P downgrades the company's corporate credit rating to CCC from B-, with a negative outlook, follows VTG's announcement that it has retained Lazard to assist in reviewing financing and strategic opportunities.
- VTG's debt trades substantially below par value, and the ratings agency believes the company could consider a distressed exchange, which would be viewed as tantamount to default.
Feb. 13, 2015, 2:44 PM
- It’s not just Seadrill (SDRL -4.7%) - Transocean (RIG +2.3%), Diamond Offshore (DO +1.2%) and others also have rigs working for Petrobras (PBR +5.9%), but analyst Lenny Zephirin is not particularly concerned.
- SDRL said earlier that it was removing $1.1B worth of Petrobras orders from its backlog due to the ongoing corruption scandal affecting the Brazilian company.
- RIG, DO, Ocean Rig UDW (ORIG +0.8%), Paragon Offshore (PGN -1.8%) and Vantage Drilling (VTG -4.4%) all have ultra-deepwater rigs working for PBR, and Zephirin believes those rigs "are not affected."
- The move reflects mostly on the troubles at PBR, the analyst says, perhaps suggesting the company is "losing discipline around their long-term drilling plan."
Feb. 3, 2015, 12:57 PM
- Zephirin Group’s Lenny Zephirin upgrades Seadrill (SDRL +9.3%), Noble Corp. (NE +4.4%) and nearly every other offshore driller in the firm's coverage, citing a significant change in market sentiment as mounting doubt of a recovery of oil prices that had held down share prices of offshore drillers reverses.
- SDRL and Hercules Offshore (HERO +13.1%) are raised to Buy Speculative Risk from Sell, Ocean Rig (ORIG +10.4%) is lifted to Buy High Risk from Sell, NE and Diamond Offshore (DO +0.4%) is upgraded to Hold Speculative Risk from Sell, Ensco (ESV +2.4%) is lifted to Hold High Risk and Vantage Drilling (VTG +8.8%) to Hold Speculative Risk; the already had Buy rating for Transocean (RIG +5.9%) and Rowan (RDC +3.2%).
- Energy stocks are higher across the board as crude oil trades up 4.2% at $51.66/bbl and sits nearly $9/bbl above its January low.
Aug. 8, 2014, 2:39 PM
- Offshore drillers continue to show some resilience after Transocean (RIG +1.6%) reported solid Q2 earnings, but analysts suggest it's too early for investors to jump in.
- Jefferies analysts still see challenges, in particular for RIG's 5th G fleet as rigs scramble down market/incur idle time; also, the potential for prolonged weakness in the North Sea leads the firm to lower estimates for FY 2016 even as it is "modestly more comfortable" that a broader 2016 recovery could still be in play.
- UBS thinks RIG will have to make the decision to either reduce the dividend or increase its debt by 2015; dayrate already are down 25%-40% from peaks levels, and pressure likely will continue given limited rig demand and fierce competition, and regular dropdown proceeds from the MLP probably will not provide quite enough help for RIG's free cash flow.
- SDRL +2.7%, NE +2.9%, ATW +2.2%, RDC +2.3%, VTG +1.6%,ESV +0.3%.
Jul. 30, 2014, 3:10 PM
- Newfield Exploration (NFX -5.1%) and EXCO Resources (XCO -6.4%) are the latest examples of oilfield services and equipment companies that have sold off despite reporting reasonably healthy quarterly results.
- NFX is sharply lower after Q2 earnings missed expectations but revenues beat estimates and rose 40% Y/Y; it even reported a deal for its Granite Wash assets that would bring in $588M.
- XCO also offered mixed Q2 results - a $0.01 earnings miss with a revenue beat - but said increased capex would not result in significant production volumes until 2015.
- Global Hunter - while also downgrading Natural Gas Services Group (NGS +0.3%) and Vantage Drilling (VTG +0.1%) - thinks the market is showing fatigue in the sector, particularly with positive onshore oil service data points that may no longer seem incremental.
Feb. 28, 2014, 9:14 AM
Jan. 23, 2014, 2:18 PM
- Noble Corp. (NE -9.7%) leads a drop in deepwater drilling contractors after saying it is seeing fewer contract opportunities than a year ago and the industry may be experiencing a “pause in the cycle” after years of growth fueled by oil and natural gas discoveries.
- The pace of customer spending growth is expected to be lower this year compared with last year, NE says in its earnings call, and that's with 38 ultra-deepwater rigs around the world looking for work vs. 22 a year ago.
- The market for shallow-water rigs also looks wobbly, as Hercules Offshore (HERO -16.3%) said yesterday in a fleet status report that it suspended plans to reactivate a shallow-water rig in the Gulf of Mexico.
- Also: DO -5.3%, ESV -4.8%, RDC -3.8%, ATW -3.9%, RIG -3.5%, SDRL -2.8%, HP -1.1%, VTG -4.3%, PKD -1.9%.
Jul. 11, 2013, 11:02 AM
Vantage Drilling (VTG -7.4%) slides after the company announced a proposed $75M offering of convertible senior notes Wednesday. This morning, VTG announced the pricing of the offering (which turned out to be $85M): The notes are convertible at the company's election to ordinary shares at an initial rate of $2.39/ share. The deal has a host of stipulations and conditions that should perhaps be reviewed by shareholders. (PR)| Jul. 11, 2013, 11:02 AM
Jul. 11, 2013, 9:11 AM
Aug. 20, 2012, 9:57 AM
Vantage Drilling (VTG +3.3%) says the Aquamarine Driller's customer in Malaysia has exercised the first of its one-year options, extending the current contract to Nov. 2013. VTG expects the exercise of the option will generate ~$56M in revenue over the extension period.| Aug. 20, 2012, 9:57 AM | 1 Comment
Mar. 21, 2012, 9:52 AMVantage Drilling (VTG +5.6%) trades higher after the company agrees to acquire the rights for the ultra-deepwater drillship known as Dragonquest for $164M. After delivery, Dragonquest is expected to be used in the Gulf of Mexico, pursuant to a 8-year contract with Petrobras. | Mar. 21, 2012, 9:52 AM | 1 Comment
Mar. 16, 2012, 9:53 AM
Feb. 15, 2012, 9:05 AM
Premarket gainers: BPAX +51%. IPAS +21%. BCRX +14%. WCG +11%. TSEM +9%. CMCSK +8%. EGLE +7%. CLWR +7%. CMCSA +6%. ANF +6%. HIG +6%. VTG +5%. TTM +4%. K +3%. BCS +3%. DANG +3%. YGE +3%. DMND +3%. MET +3%. ACAS +3%. GNOM +3%. BZH +3%. COF +3%. TEVA +3%. MLU +3%.| Feb. 15, 2012, 9:05 AM
Losers: VG -12%. NBG -9%. RENN -8%. NZGA -6%. OC -5%. FXCM -3%. ALU -3%.