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There are 8 articles on this stock available only to PRO subscribers.
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.
Atwood Oceanics: Why This Small Cap Has 60% Upside
Market Is Overlooking Atwood Oceanics' Future Cash Flow
Atwood Oceanics: An Undervalued, High-Growth Offshore Driller
Mon, Nov. 17, 3:59 PM
- In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
- Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
- GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
- But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
Mon, Nov. 10, 6:04 PM
Sun, Nov. 9, 5:35 PM
Wed, Nov. 5, 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%.
Tue, Nov. 4, 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.
Mon, Nov. 3, 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%.
Thu, Oct. 23, 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.”
Tue, Oct. 21, 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.
Mon, Oct. 20, 6:14 PM
- Seadrill (NYSE:SDRL) was downgraded to Neutral/High Risk from Buy today at Citigroup, which cited a combination of disappointing exploration, further investment decision delays and increased oil price uncertainty as leading to a 10% reduction in its medium-term rig demand forecast.
- Citi believes the decline, combined with significant supply added in 2015, likely will extend the current market weakness into 2016, which could materially affect SDRL’s ability to sign and thus finance the next wave of its newbuilds; it also sees increased risk of dividend cuts to maintain the leverage ratio within covenants.
- SDRL finished flat today but most offshore drillers rose even as the firm lowered its growth estimates across the sector to reflect a slowdown in investment: ATW +3.4%, HP +3.3%, RDC +3.2%, DO +2%, RIG +1.8%, NE +1.7%, PACD +1.2%, ESV +1%.
Mon, Oct. 6, 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%.
Mon, Sep. 29, 3:39 PM
- Jefferies sees little hope in the near term for offshore drillers such as Transocean (NYSE:RIG), Diamond Offshore Drilling (NYSE:DO) and Noble (NYSE:NE), as continued negative trends show an industry "continuing to die by 1,000 cuts."
- Despite some apparent progress in Gulf of Mexico demand creation from softer rates, the firm is not convinced the improvement can carry into 2015 after current small-scale exploration programs conclude; West Africa "feels worse, as the contract roll-off schedule is picking up."
- As such, Jefferies looks for a rise in idle rigs, with RIG suffering most; it has already suggested that fifth generation UDW ship GSF Jack Ryan may not work in 2015, and similar risk is seen for near-term rolloffs Deepwater Discovery and Sedco Express as both also due for multi-month yard visits in 2015.
- The firm's preferences in the sector are Atwood Oceanics (NYSE:ATW) and Rowan (NYSE:RDC).
Wed, Sep. 24, 12:27 PM
- Offshore drillers continue their dramatic recent slide, as rigs go idle and analysts cut their ratings, and Wells Fargo piles on with a new report explaining why it’s still too early to buy into the group.
- The firm sees offshore spending facing a structural slowdown, the offshore rig count set for anemic growth through 2015, further downside risk In offshore rig utilization and dayrates, and OSV utilization and rates likely to face downward pressure.
- Wells initiates coverage on Transocean (RIG -2.9%), Seadrill (SDRL -1.9%) and Diamond Offshore (DO -2.5%) at Underperform, while Noble Corp. (NE -2.5%), Rowan (RDC -0.5%), Ensco (ESV -1.9%), Atwood Oceanics (ATW -1%) and Pacific Drilling (PACD -3%) are started at Market Perform.
Tue, Sep. 23, 3:16 PM
- In its latest fleet status update, Transocean (RIG -0.4%) said it had idled one of its rigs, and Credit Suisse analyst Gregory Lewis says there's more of the same ahead for the offshore drilling services provider.
- The idling of the Jack Ryan puts RIGs ultra-deepwater idle fleet count at three rigs, and RIG has another six UDW rigs rolling off contract by year end; the analyst warns of more rigs to idle later this year.
- The news wasn’t all bad, however, as some new contracts were at or above expectations, according to RBC.
- Offshore drillers are mixed today after recent sharp declines: DO +1%, ATW +0.6%, SDRL -0.9%, RDC -0.9%, ESV -0.6%, PACD -0.2%.
Wed, Sep. 17, 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%.
Wed, Sep. 10, 7:37 PM
- The offshore drilling market could continue to deteriorate next year due to weak demand and a flood of new vessels, according to Seadrill (NYSE:SDRL) CFO Rune Magnus Lundetrae and other industry execs.
- "The market is going to be bad this year, it is going to be worse next year, then it will be stabilizing," Lundetrae says.
- Day rates for the most advanced ultra-deepwater rigs peaked at ~$650K last year and are now down to $375K-$500K, though contracting activity by oil firms is so slow that it is hard to establish the actual market rate, execs say.
- Lundetrae says the market could need another 24 months to bottom out, though rates already are near the bottom for older assets.
- Offshore drillers have been among the worst performing shares this year, with SDRL -18% YTD, RIG -25%, ESV -18%, RDC -19%, ATW -14%, DO -27%, PKD -24%, HERO -51%.
Thu, Aug. 21, 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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