Atwood Mako Contract Strengthens Atwood's 2015 Outlook
- Atwood Oceanics secured a contract for the Atwood Mako jack-up that boosts the company's FY15 contract coverage and revenue visibility.
- The contract is likely to add $11 million to the company's revenue for the firm period. On contract extension, the revenue contribution can be $30 to $35 million for FY15.
- I expect the company's 1H15 results to be largely in line with 2H14, and no significant decline in revenue makes Atwood Oceanics attractive.
- Contracts for Atwood Hunter and Atwood Admiral can trigger upside for the stock as they would change the FY15 and FY16 outlook.
- Even with the positives, investors need to consider small exposure to the stock as sustained lower oil prices can translate into potential offshore contract cancellations.
Atwood Oceanics Inc.: Fleet Analysis As Of January 12 After The Jackup Atwood Mako New Contract
- Atwood Oceanics released today that it has contracted the Atwood Mako, for a minimum term of 70 days at a day-rate of $155k, starting March, 2015.
- Atwood Oceanics is an excellent company in a sector caught in a bear cycle. The stock has been suffering from a collapsing oil price despite an excellent balance sheet.
- ATW is attractive and should be accumulated at this low price. Goldman Sachs confirmed today his BUY rating on ATW.
- Atwood Oceanics has sufficient long-term contracts for its floater fleet, insulating the company from the near-term downturn.
- 2015 and 2016 earnings will be quite robust.
- Operating cash flow is sufficient to finance the remaining newbuild capex.
Update: Atwood Oceanics Inc. - Fleet Analysis As Of January 5, 2015, And Commentary
- Atwood Oceanics released its new fleet status on January 5, 2015. No new contracts announced and the semi-submersible Atwood Hunter is now available.
- Atwood has a strong backlog, however, still some concerns about the Atwood Admiral delivery in September 2015, the Atwood Hunter now idle and the jackup Atwood Mako which will go.
- ATW is sufficiently contracted to weather this oil downturn despite few minor weaknesses.
Atwood Oceanics Inc.: Fleet Analysis As Of December 1, 2014, And Commentary
- Atwood Oceanics released its fleet status on December 1, 2014. Few changes in contract can be noticed.
- The oil industry is collapsing due to the OPEC unwillingness along with the rest of the producers worldwide to cut production at the level of the actual weak demand.
- ATW is a good company- well-managed with a strong backlog that will shield it against a prolonged bearish cycle. I recommend accumulating ATW on weakness.
Seadrill's Troubled Waters Show The Need For Offshore Drillers To Allocate Capital Wisely
- Following SDRL's dividend suspension, offshore drillers sold off.
- The sell-off may highlight the unsustainable nature of dividends in the sector.
- Among those that have sold off, ATW and NE remain intriguing.
Atwood Oceanics Inc.: A Newly-Minted Dividend Play
- The article looks at the feasibility of Atwood's dividend in a challenging offshore environment.
- Atwood is one of the best operators in the industry.
- Analysts' earnings projections have changed sharply.
Atwood Oceanics Inc.: Fleet Analysis And Recent Q4 Result Comments And Recommendation
- Atwood Oceanics Inc., has delivered its fourth-quarter 2014 results recently, with total revenue of $323.37 million and EPS of $1.72. Good quarter again up 10.4% in revenue from Q3.
- Atwood is initiating a dividend of $1 per share starting next year, which represents 2.8% per annum.
- The company is facing some strong headwinds especially during 2015, and was forced to delay delivery of the Atwood Archer and Atwood Admiral for 6 months.
- Oil price has tumbled to about $80 now and depending on its future direction ATW can be a good investment. However, the fleet presents minor weaknesses entering 2015.
Atwood: Undervalued With Great Potential Upside For The Long Term
- Atwood Oceanics is a leading offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry.
- With a Forward PE of just 7.7x, this Mid Cap Offshore Driller is extremely attractive.
- The company is profitable and has a strong balance sheet to ride out the difficulties this industry is experiencing.
- Atwood Oceanics contracts are long-term and this ensures strong cash flow even in weak offshore markets.
- The company is initiating first quarterly dividend from 1Q15 and the dividend is sustainable considering the cash flow visibility.
- New rig delivery in 2015 and 2016 will keep the growth momentum strong for Atwood and the company expects strong double digit EPS growth in 2015 and 2016.
- Atwood and Seadrill are two quality companies but Atwood is the better pick.
- Both companies have a best-in-class fleet and backlog.
- But Atwood has a more conservative balance sheet and dividend policy.
- Offshore drillers have been under heavy pressure recently due to falling oil prices.
- ATW recently announced initiation of a $0.25 per share dividend effective 2015.
- Trends indicate that oil prices will remain low putting pressure on ATW to deliver on dividends and sustain flexibility for growth.
- Management made the wrong choice in initiating a dividend and should use the funds to buy back shares in 2015.
Atwood Oceanics Inc.: Complete Fleet Analysis And Status As Of October 1, 2014
- Atwood is a mid-tier offshore driller that has successfully enhanced its fleet to the UDW drillships market. The company has 12 contracted rigs and two new builds.
- Atwood's modern fleet is nearly fully contracted, and the company has a $3.1 billion backlog in firm revenue until 2018.
- Atwood is a well managed and well-equipped company that will fare better than most of its peers in the industry. The company seems a safe bet and should be accumulated.
- The market has turned decisively against offshore drillrig operators on the assumption of falling dayrates and unused drill capacity. Is the market being efficient, or is this an opportunity?
- I take a closer look at Atwood Oceanics, a mid-tier driller with strong fundamentals, including strong financial position, earnings history, and revenue efficiency.
- Atwood's earnings and contract visibility provide a floor upon which a highly pessimistic scenario can be simulated. Do share prices reflect this terrible scenario already?
- I suggest that shares of Atwood incorporate a lot of low expectations already, which the company should easily beat, even with cyclical headwinds at play.
- Outside start-up issues, modern fleet to provide advantages going forward.
- Revenue efficiency remains very high on established fleet.
- Atwood Oceanics trades at an attractive valuation compared to larger competitors.
Atwood Oceanics Inc.: Fleet Analysis And Third-Quarter Results On July 30 And Commentary
- Atwood Oceanics released its third-quarter results last week. Revenues were good despite a challenging environment.
- The company is a mid-tier offshore driller that has successfully enhanced its fleet to the UDW drillships market with its Atwood advantage and soon Atwood Achiever.
- I believe it is the right time to accumulate this stock, for the rebound in 2015, and despite some headwinds ahead, particularly with the jackup sector.
Atwood Drilling: A Look Ahead To The Company's Upcoming Earnings
- Analysts are expecting ATW to earn $1.12/share in terms of EPS when the company announces its FQ3 results on July 28.
- Recent trend behavior could continue well into the second-half of the year, if ATW can meet and/or exceed analysts earnings expectations for the upcoming quarter.
- If the company can demonstrate increases in net income and contract drilling revenue while decreasing its overall costs, then I strongly believe ATW should have no problem exceeding estimates.
Atwood Oceanics Inc.: Fleet Analysis And Recent Q2 Result Comments And Recommendation.
- Atwood Oceanics Inc. delivered its second-quarter 2014 results recently, which have been affected by Atwood Advantage's new ultra-deepwater startup delays.
- The analysis of the company's fleet is showing some potential and also few weaknesses in this general softening environment.
- ATW as well as RDC, wants to expand in the ultra-deepwater sector at maybe the wrong time, which will eventually slow growth later. The company is not serving dividends.
Mon, Jan. 12, 12:48 PM
- Goldman Sachs lowers target prices for several offshore drillers as it cuts its crude oil price outlook, although it still rates Atwood Oceanics (ATW -3.3%) a Buy.
- The firm expects offshore driller stocks to struggle with a supply/demand imbalance driven by the 62 newbuild floaters and 113 jackups coming to the market through 2016 (24% and 28%, respectively, of the working rig count), on top of weak demand, and sees demand curtailed as projects are delayed, resulting in declining utilization for offshore rigs and lower earnings for the majority of offshore drillers as rigs rolling off contracts could struggle to find contracts.
- ATW is Goldman's lone Buy-rated name due to high contract coverage, a young rig fleet and favorable valuation; Sell-rated Transocean (RIG -4.6%) and Diamond Offshore (DO -4.9%) have high rig availability, exposure to aging assets, potential for asset writedowns, and risks to their current dividend payments.
Dec. 19, 2014, 11:44 AM
- Transocean (RIG +4.6%) discloses that it plans to scrap seven of its older, lower-quality deepwater and midwater vessels, and adds that it may not be finished getting rid of parts of its fleet, even as oil prices and demand for offshore rigs have fallen.
- RIG says it expects to take a related $100M-$140M charge in Q4.
- RIG's decision to put the rigs up for sale comes after a string of vessel retirements and a $2.76B writedown of the company’s asset value in November.
- Most offshore drilling service contractors are higher: ESV +5.1%, RDC +1.7%, DO +0.8%, ATW +3.1%, PACD +8.4%, but SDRL -4.3%.
Dec. 3, 2014, 2:53 PM
- Offshore drillers are rising modestly today after suffering a beating this year, but Jefferies cautions against seeing a buying opportunity in the beleaguered group.
- The firm says neither fundamentals nor valuation paint a compelling enough picture of the group; "more importantly, current softness masks the evolution of deepwater drilling to where specifications matter."
- Transocean (RIG +1.6%), which Jefferies says has the biggest contracting challenges both near-term and in the longer-run given a disproportionate mix of older UDW/UK floaters, is the least favorite name, while the firm sees relative value in Atwood Oceanics (ATW +0.7%) and Rowan (RDC +1.2%).
- Among other offshore drillers: DO +3.1%, PACD +3.1%, ESV +1%, NE -0.7%, SDRL -0.7%.
Dec. 1, 2014, 3:19 PM
- A bit late, Guggenheim analyst Darren Gacicia downgrades Seadrill (SDRL -5.5%), Transocean (RIG -4.5%) and Diamond Offshore (DO +3.3%) to Neutral from Buy, finally admitting that downward pressure on oil prices and a potential for capital markets to become shy to fund newbuild deliveries has undercut the tenets of his previous bull thesis.
- SDRL and RIG remain the most levered to deteriorating offshore market conditions, he says, believing SDRL shares may also suffer from an ownership transition from income to value investors and RIG perhaps sharing the same fate, with a 2015 dividend cut likely amid the potential for further asset writedowns.
- At DO, Gacicia sees risk of a dividend cut, rig retirements and deteriorating offshore market fundamentals as negative near-term catalysts; the firm also downgrades Seventy Seven Energy (SSE -16.2%), Cameron (CAM -2.8%), Frank's International (FI -0.1%) and FMC Tech (FTI -0.1%).
- In the space, the analyst prefers drillers with high-quality assets, solid contract coverage and a lack of funding needs, such as Noble Corp. (NE -0.2%) - which also has a buyback catalyst - Atwood Oceanics (ATW -0.1%) and Pacific Drilling (PACD -3.7%).
Nov. 28, 2014, 9:45 AM
- The sector was wrecked on Wednesday as Seadrill suspended its dividend amid "significant deterioration" in the oil market, and its North Atlantic Drilling suspended its payout because of the same combined with the delay in its Rosneft deal.
- The market "deteriorates" even further today with OPEC's decision yesterday not to cut production. WTI crude is "off the lows" as they say, but still down 5.8% at $69.43 per barrel.
- Seadrill (SDLP), North Atlantic Drilling (NADL -8.3%), ENSCO (ESV -8.8%), Atwood (ATW -7.7%), Rowan (RDC -7.2%), Pacific Drilling (PACD -4.5%).
Nov. 26, 2014, 5:37 PM
Nov. 26, 2014, 10:42 AM
- Seadrill (SDRL -19.2%) shares are plunging after the drilling contractor suspended dividend payments due to "significant deterioration" in the broader markets, and North Atlantic Drilling (NADL -13.8%) suspends its dividend because of the delay of its agreement with Rosneft as well as the weaker market.
- The move is slamming the entire sector, and Wells Fargo says that although SDRL is the first driller to cut its dividend, Diamond Offshore (DO -8.3%) and Transocean (RIG -4.7%) will "ultimately have to follow suit."
- Also: SDLP -6.6%, ESV -4.8%, ATW -4.3%, RDC -3.3%, NE -3.2%, PACD -6.5%, ORIG -2.7%, HP -1.1%, RIGP -2.5%.
- ETF: OIH
Nov. 10, 2014, 6:04 PM
Nov. 5, 2014, 3:31 PM
- Rowan (RDC +4.4%) leads offshore drillers higher after easily beating Q3 earnings estimates and forecasting revenues to rise in 2015 despite its own predictions for a soft rig market next year; it certainly doesn't hurt that oil prices are higher today.
- FBR Capital says it likes RDC as both a near-term idea on a sentiment snap-back and as a longer-term investment opportunity for patient investors; the firm believes the risk in RDC is mitigated by the company's fully locked-up ultra-deepwater newbuild fleet, whose contract starts account for the entirety of net earnings growth it foresees from 2014 to 2016, as well as concentrated exposure to high-spec jackups, which make up 93% of 2015 jackup earnings and should see fundamentals hold up better than the other classes.
- Also: RIG +5.2%, SDRL +4.5%, ESV +3.6%, DO +5.7%, NE +5.4%, ATW +2%.
Nov. 4, 2014, 1:45 PM
- November is just two days old, but offshore drillers Transocean (RIG -4.7%), Seadrill (SDRL -7.2%), Diamond Offshore (DO -3.6%), Atwood Oceanics (ATW -2.6%) and Noble Corp. (NE -5.2%) are down more than 8% so far this month.
- The Zephirin Group thinks plunging oil prices are already beginning to impact demand for offshore drilling platforms, and the current dayrate range for ultra-deepwater drillships of mid $400-500/day is not helping the outlook.
- The latest piece of evidence of the weakness is ATW's six-month postponement of the delivery of two drillships under construction, which Zephirin expects will cost the company an additional $40M-$45M per rig.
- The firm also foresees a high possibility that the 2015-16 market and contract renewals rates could shift below expectations when energy companies start announcing 2015 capex budgets late this year.
Nov. 3, 2014, 2:58 PM
- Offshore drillers are broadly lower after Atwood Oceanics (ATW -5.2%) discloses in its latest fleet status report that it is delaying two deliveries in its fleet, and Diamond Offshore (DO -4.7%) is downgraded to Strong Sell from Sell at Nordea.
- The damage is minimal at Ensco (ESV -0.9%), however, as Johnson Rice analysts offer positive commentary on the "top-tier producer" after ESV's Q3 results displayed impressive operational execution while management made several positive moves during the quarter to improve the company’s financial flexibility.
- While management continues to expect further floater utilization and dayrate challenges through 2015, the jackup market was described as a potential near-term offset to floater headwinds as ESV cited record backlog within the jackup fleet and expected incremental Middle East jackup demand in H1 2015.
- Also: Caledonia deal not likely to held Transocean (RIG -2.8%) shareholders, analyst says.
- Also: RDC -2.8%, SDRL -3.1%, NE -1.1%, PACD -2.4%.
Oct. 23, 2014, 3:46 PM
- Diamond Offshore's (DO +5.5%) better than expected Q3 results is providing a lift across the offshore drilling sector today: RIG +3.8%, ESV +4.1%, RDC +2.6%, SDRL +1.9%, PKD +3.6%, HP +3.1%, ATW -0.5%.
- It was a trifecta of good news for DO: Its operating profit of $0.97/share easily topped Wall Street consensus for $0.79, it announced a special dividend of $0.75/share, and a positive fleet status update included two new rigs that had found work with Hess and Petrobras extending contracts on three rigs for three years.
- However, Cowen’s J.B. Lowe is cautious, noting that while that the $400K dayrates with Hess give DO a solid backlog though a soft time in the market, "they represent a new low in leading-edge newbuild ultra-deepwater floaters in this part of the cycle.”
Oct. 21, 2014, 3:42 PM
- A 2015 deepwater market recovery is not the cards as oil companies head into budgeting season amid a shaky oil price outlook, with no reversal of negative news flow soon although it is already well appreciated by Wall Street, Morgan Stanley’s Ole Slorer and Jacob Ng say.
- The firm views a group inflection boiling down to an improving oil price outlook, and recommends sticking with premium asset exposure via Seadrill (SDRL +6.1%) and Atwood Oceanics (ATW +4.1%) in the meantime.
- The market already appears to be pricing in dividend cuts, with current yields now well above historical trading ranges, Stanley says while still seeing relative safety in yieldcos Transocean Partners (RIGP -0.5%) and Seadrill Partners (SDLP +4.1%), which should continue to offer strong distribution growth profiles driven by parent need for funding.
- While retaining Equal Weight ratings on both Noble (NE +3.9%) and Ensco (ESV +3.1%), Stanley sees higher total return upside in NE (~25%) vs. ESV (~10%) over the next few months.
Oct. 6, 2014, 3:42 PM
- If offshore drillers didn’t have enough to worry about, they now have to be concerned with new rigs coming onto the market, Credit Suisse analysts say.
- "2015 looks tough, real tough" for offshore drillers, the firm says, pointing to the newbuild drillship Maersk Venturer, which "has finally left the shipyard without a contract, well sort of... Expectations are that the rig will end up with Total in southeast Asia for some short-term work... While this was the first newbuild drillship to leave a shipyard without its’ maiden contract inked it will not be the last! We expect 1H15 to see peak floater deliveries."
- The companies are trading mixed today: RIG +2.8%, SDRL +2.2%, DO +2%, RDC +1.1%, ATW +0.9%, ESV +0.9%, PACD +0.7%.
Sep. 17, 2014, 3:25 PM
- Offshore drilling stocks continue to slide after fleet status reports from Ensco (ESV -1%) and Diamond Offshore (DO -1.8%) confirm that the rig market still has its problems.
- RBC reduces its EPS estimates for ESV based on the September update which featured negative datapoints for stacked floaters, newbuild delays and idle jackups, but the company was able to keep two of its 8500 series rigs working for the rest of the year.
- Susquehanna notes that DO did not report any new notable contracts in its latest fleet status report, and the firm does not expect any new tenders for at least the rest of 2014 and possibly Q1 2015.
- Also: SDRL -0.2%, RIG -1.2%, RDC -2.3%, NE -2.8%, ATW -0.2%, SDLP +0.9%, RIGP +0.4%.
Aug. 21, 2014, 2:29 PM
- The latest fleet status reports from Diamond Offshore (DO -0.2%) and Hercules Offshore (HERO -3.8%), released after yesterday's close, appear to provide another sign that offshore drilling likely will get worse before it gets better.
- Raymond James analysts explain that DO's negative fleet status included a lower than expected dayrate on the ultra-deepwater rig Ocean Monarch for one year at $425K, below the firm's estimated 2015 rate of ~$450K; a convertible option to alter the contract to an 18-month term also was below expectations.
- HERO's August fleet status included a contract termination; Raymond James had expected choppiness in the coming months through hurricane season, but says the termination and increase in potential rigs available is cause for further caution.
- Also: SDRL -0.7%, RIG -0.5%, ESV -0.2%, HP -1.3%, RDC -0.7%, ATW -1%.
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