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Atwood Oceanics Inc. (ATW)

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  • Tue, May 19, 11:49 AM
    • Offshore drilling contractors are sharply lower across the board after Transocean's (RIG -5.1%) latest fleet status update showed the company has idled three more deepwater rigs, bringing its number of out-of-work units to 15.
    • RIG said its deepwater floater Marianas joined the idle fleet along with the Celtic Sea and M.G. Hulme Jr., pushing the idle fleet count to nine rigs.
    • The Development Driller II, GSF Rig 140 and Sedco Express were extended by an average of ~80 days but at reduced dayrates; Development Driller II was extended at $315K/day for 100 days, GSF Rig 140 suffered a 40% dayrate reduction to $156K for 120 days, and Sedco Express was extended for 18 days with no rate change.
    • Credit Suisse reiterates its Underperform rating with $12 price target, and Cowen maintains its Market Perform rating and $14 price target.
    • Also: SDRL -5%, NE -3.6%, ESV -3.6%, RDC -4.2%, DO -4.7%, ATW -3.4%, PACD -6.1%.
    | 23 Comments
  • Mon, May 18, 3:19 PM
    • The Goldman Sachs energy team is as gloomy as ever on offshore drillers such as Sell-rated Transocean (RIG -3%) and Diamond Offshore (DO +0.9%), as well as downgraded Atwood Oceanics (ATW -3.2%), believing that 2017 will be "a particularly painful year."
    • The industry is retiring floating rigs, but that will not solve the problem without rising demand, Goldman says, expecting demand instead will fall an additional 8% by 2017, which will keep utilization at 77% and meaning significant further idling of floating rigs and sizable rate pressure on deepwater rigs.
    • Goldman says although ATW remains the "best-in-class” offshore driller and is somewhat cushioned in 2016-17 from the weak macro environment owing to contract backlog, the company faces significant re-contracting risk in 2017, which is "becoming hard to ignore."
    • Earlier: BP, Statoil, Chevron cut to Sell at Goldman Sachs
    | 19 Comments
  • Tue, May 12, 11:35 AM
    • Ocean Rig UDW’s (ORIG +13.6%) better than expected Q1 earnings report follows the pattern set earlier this reporting season by Transocean (RIG +1.7%), Noble (NE +2.8%) and Diamond Offshore (DO -0.1%), and the group is moving higher in morning trade.
    • Q1 contract drilling revenues of $402M beat estimates, as ORIG’s on-the-water fleet again delivered an impressive operating performance, Cowen analysts say; ORIG achieved record utilization of 99%, up from last quarter’s 95%, and adjusted EBITDA of $219M was well ahead of Wall Street’s $168M forecast.
    • Q1 operating expenses of $153M were down 22% Q/Q as cost-cutting initiatives are starting to be reflected in results, a trend Cowen expects will continue throughout the remainder of 2015.
    • ORIG also maintained its $0.19/share quarterly dividend even in the face of a declining offshore rig market.
    • Also: SDRL +4.7%, ESV +2.3%, RDC +2.1%, ATW +0.8%.
    | 5 Comments
  • Tue, May 5, 2:35 PM
    • Diamond Offshore (DO +5.9%) is surging a day after reporting better than expected Q1 results due to a lower tax rate for the quarter after adjusting for impairments and restructuring charges, but Susquehanna analysts refuse to jump on the bull train.
    • The firm cuts its 2015-16 EPS estimates to $1.95 and $0.01 from $2.18 and $0.09 to reflect lower revenues based on expected dayrates and utilization, as DO indicated that its outlook is expected to be worse for the remainder of 2015 and is showing the first signs of leading edge rigs becoming un-contracted as they roll off.
    • Despite cost-cutting measures DO and other offshore drillers have taken to offset lower utilization, the firm believes dayrates and activity levels still have room to go lower.
    • But with oil price strength today, DO and other offshore drillers are moving higher: SDRL +10.2%, RIG +4.2%, ESV +3.1%, RDC +4.5%, ATW +4.5%, NE +1.9%, PACD +6.8%, HERO +6.5%.
    | 7 Comments
  • Thu, Apr. 30, 11:48 AM
    • Ensco (ESV +4.1%) and Atwood Oceanics (ATW +5.8%) are sharply higher following their strong Q1 earnings reports (I, II), even though neither company sees the offshore drilling environment getting much better soon.
    • Cowen analysts note that management commentary on the outlook for the offshore drilling sector remains gloomy as the current downturn looks to be extending well into 2016, but says ESV’s recent ability to refinance $1.1B of debt speaks to the company’s "strong positioning amongst its peers as one of the premier offshore contract drillers."
    • Meanwhile, ATW also enjoyed a "great quarter" but challenges remain, including lower rig utilization and pricing, according to Credit Suisse.
    | 4 Comments
  • Tue, Apr. 21, 11:48 AM
    • Raymond James doubles down on its negative outlook for offshore drilling contractors, as the firm cites the lack of new contracts and the need for a much more significant move in oil prices to materially change the sector's landscape.
    • The firm says the current contracting rate trends well below its expected pace and even below 2009 levels as the desire to pursue further activity skids to a halt, and believes that 2016 consensus estimates have substantial room for downward earnings revisions; including contract cancellations, the sector actually experienced negative incremental demand during the Q1.
    • Raymond James sees the average offshore rig count declining by 13% in 2016 and a further 4% in 2017; even with cost-cutting efforts, it expects the average uncontracted rig to lose money as leading edge dayrates will flirt with risked breakeven levels with only minimal recovery in the next two years given the levels of excess supply.
    • Offshore drillers are lower today: ORIG -5.8%, RIG -4.5%, SDRL -4.1%, NE -2.8%, ESV -2.8%, DO -2.1%, ATW -2.1%, PACD -2%, RDC -1.9%.
    | 13 Comments
  • Fri, Apr. 17, 11:46 AM
    • Transocean's (RIG -2.3%) rigs are "dropping like flies," Credit Suisse says as it reiterates its Underperform rating and $12 stock price target after RIG's latest fleet status report revealed it had a contract terminated early and had decided to scrap yet another rig.
    • RIG's scrapping of the GSF Explorer, which last worked in November 2014 at $412K/day, boosts the number of floaters the company intends to scrap to 19, up from 11 at the end of 2014; early termination of the Sedco Energy raises RIG’s idle floater count to six.
    • RIG expects scrapping the GSF Explorer will result in a Q2 non-cash charge of $100M-$120M.
    • Offshore drilling contractors are broadly lower, particularly Atwood Oceanics (ATW -4.1%) after Chevron shortened its contract term for one of its drilling units; also DO -2.2%, PACD -2.1%, NE -1.5%, ESV -0.6%, RDC -0.2%, SDRL +0.3%.
    | 14 Comments
  • Thu, Apr. 16, 10:58 AM
    • Ensco (ESV -4.8%) reveals in its April fleet status report that it agreed to lower dayrates on seven of its jackups working for Saudi Aramco in the Middle East, with reductions ranging 10%-20% and an average decline of 15% across the seven rigs.
    • Cowen analysts believe further rate negotiations are ongoing and could affect other operators with units contracted to Saudi Aramco, noting that Rowan (RDC -4.2%) may be the most exposed since it has nine rigs currently working with Aramco; RDC secured three-year contract extensions in Sept. 2014 on four of the jackups, which could see reductions, as well as four units currently under negotiation extensions.
    • Other contractors with units working for Aramco are Noble Corp. (NE -4.9%) with four units, Hercules Offshore (HERO -3.9%) with two (after the termination of the Hercules 261), and Seadrill (SDRL -3.9%) with three.
    • Other offshore drilling contractors also are lower: RIG -3%, ATW -2.3%, DO -4.1%, HP -2.7%, ORIG -2.5%, PACD -4.2%.
    | 14 Comments
  • Thu, Mar. 19, 2:26 PM
    • It's a rough day for offshore drilling contractors following Transocean's (RIG -7.1%) announcement last night that it will scrap four rigs and stack four more it previously had idled, taking a $300M-$325M charge.
    • Most notably, the Deepwater Expedition, which was working for $650K/day in 2014, will be scrapped; overall, the number of rigs the company plans to scrap is now 16, with possibly more to come.
    • RIG was awarded a $300K/day contract for one rig for work off the coast of Nigeria, and idles another rig.
    • In cutting its stock price target to $16 from $17, RBC expects just 10%-20% of available rig days will be contracted eventually given current market conditions vs. Wall Street expectations for ~35%.
    • Also: ESV -4.3%, NE -5.3%, RDC -0.6%, DO -3.1%, SDRL -2.4%, ATW -5.7%, PACD -4.5%, HP -1.8%.
    | 20 Comments
  • Fri, Feb. 27, 12:45 PM
    • Hercules Offshore (HERO -28.2%) shares are crushed after this morning's downgrade to zero by Deutsche Bank analyst Mike Urban, who had maintained a Buy rating on the oil drilling services company for more than two years.
    • Urban says he had remained positive on HERO relative to his negative view on the offshore driller sector because he did not foresee a lot of new competition to enter the shallow Gulf of Mexico area where the company had a commanding market position; that dominant position is no longer enough, he says, because "the collapse in oil prices has eviscerated demand.”
    • Other stocks in the sector are rising today: RDC +3.6%, ATW +2.5%, RIG +2.4%, DO +2%, PKD +1.6%, HP +1.3%, ESV +1%.
    | 22 Comments
  • Thu, Feb. 26, 2:32 PM
    • Offshore drillers are warning that the number of deepwater rigs stacked or scrapped is set to hit a two-decade high, and predicting that the industry slump caused by lower crude oil prices could last another two years.
    • Seadrill (SDRL -2.2%) said today that the severity of the downturn and extent of oversupply was such that ~25% of the rigs would come available for hire this year, and that industry decisions regarding the cold stacking and scrapping of older units likely would accelerate to levels not been seen in two decades (Q4 earnings).
    • Transocean's (RIG -1%) Q4 results were not as bad as expected, but Senior VP Terry Bonno warned today that the company “continue(s) to expect challenging conditions... [with] extended periods of inter-contract idle time and significant competition for the limited tendering opportunities available."
    • Dayrates for advanced, deepwater rigs have tumbled from a peak of ~$650K two years ago to $350K-$400K, with contractors slashing prices in the face of dwindling exploration.
    • Also: ESV -7.3%, RDC -3.4%, DO -4.3%, ATW -5.1%, PACD -9.1%, HERO -13.6%.
    | 17 Comments
  • Tue, Feb. 24, 2:22 PM
    • Offshore drillers are sinking again after Diamond Offshore (DO -8.3%) disclosed that it probably would lose some contracts; also, Transocean Partners (RIGP -7.5%), the MLP created by Transocean (RIG -1.9%), was downgraded to Underweight with a $16 price target, cut from $26, at Barclays.
    • RIGP, which is set to release Q4 results tomorrow after the close, is not at risk of cutting its dividend but faces uncertainty in light of lowered demand for offshore drilling rigs, Barclays says, but that RIGP likely would not be able to increase its distribution if the semi-submersible DDIII were to begin operating at recently observed market rates.
    • DO is reiterated at a Sell rating with a $23 price target at Deutsche Bank.
    • Also: SDRL -2.7%, SDLP -2.8%, ESV -6.5%, RDC -4.3%, NE -4.7%, ATW -5.8%, PACD -5.2%.
    | 19 Comments
  • Mon, Feb. 23, 11:48 AM
    • Transocean (RIG -2.3%) is slumping as Susquehanna downgrades the stock to Negative from Neutral with a $12 price target, cut from $15; RIG also is caught up in today's falling crude oil prices on concerns over the global supply glut.
    • The firm is concerned over the competitive positioning of RIG’s assets to receive tenders, which will be compounded by the industry's weak macro environment; it says the "day of reckoning" for RIG’s old offshore drilling rigs has arrived, with the average age of the company’s floaters at 20.7 years vs. the industry average of 17.6 years.
    • Given the challenges, the firm sees EBITDA declining 47% in 2016 and risking further downside in 2017 if the large number of contracts set to roll off are not renewed.
    • Offshore drillers are broadly lower: ESV -3.2%, RDC -2.4%, SDRL -2.7%, NE -2.1%, ATW -1.3%, DO -0.5%.
    | 10 Comments
  • 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.
    | 3 Comments
  • 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%.
    | 4 Comments
  • 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%.
    | 26 Comments
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Company Description
Atwood Oceanics Inc is an offshore drilling contractor, engaged in drilling and completion of exploratory and developmental oil and gas wells.