Fri, Sep. 25, 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%
Wed, Sep. 2, 8:48 AM
- Vantage Drilling (NYSEMKT:VTG) says Petrobras (NYSE:PBR) has terminated a drilling contract with the rig owner's Titanium Explorer drillship ahead of the scheduled contract expiration.
- VTG says it has filed for arbitration, as it strongly disagrees with PBR's allegations of a breach of contract.
- Titanium Explorer is one of three ultra-deepwater drillships owned by VTG, which also owns four ultra-premium jack-up drilling rigs.
Wed, Aug. 26, 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.
Fri, Aug. 7, 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.
Tue, Aug. 4, 7:12 AM
Thu, Jul. 2, 5:21 PM
- Vantage Drilling (NYSEMKT:VTG) denies reports connecting the arrest of a former Petrobras director to its contract with the Brazilian company for the Titanium Explorer drillship.
- "Several hundred contracts were signed by this former director, which in Vantage's case, was after the parent board of Petrobras had approved the contract," VTG says.
- A Brazilian prosecutor said the former Petrobras exec appeared to have received bribes on a contract for the VTG drillship and another rig operated by Pride International, a company acquired by Ensco (NYSE:ESV) in 2011.
Tue, Jun. 23, 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.
Tue, Jun. 23, 8:59 AM
- Vantage Drilling (NYSEMKT:VTG) says it has retained Lazard to advise it in evaluating financing opportunities, strengthen and expand management's analysis of the changing marketplace and provide an independent resource for evaluating strategic plans.
- VTG has struggled since the oil price downturn, and its stock and bond prices have dropped sharply YTD.
Thu, May 7, 6:02 AM
Thu, Apr. 9, 6:36 PM
- Halcon Resources (NYSE:HK) bonds rallied today after the company said two investment funds advised by Franklin Templeton Investments agreed to a debt-for-equity swap.
- The funds will exchange $116.5M in principal of the 9.75% bonds maturing in 2020 for 66.5M HK common shares; the notes rose as much as $0.0375 on the dollar to yield 15.4% today in heavy volume.
- The swap, which will reduce HK's debt, is expected to close this month, and comes after the company last month announced a $150M equity offering.
- Franklin will become the second largest publicly disclosed stake in HK shares, according to Bloomberg; Franklin is among the largest publicly disclosed holder of bonds for offshore drillers including Hercules Offshore (NASDAQ:HERO) and Vantage Drilling (NYSEMKT:VTG).
Tue, Mar. 24, 11:31 AM
- FBR cut its stock price targets on oilfield services firms Rowan (RDC -1.2%), Ensco (ESV -0.6%), Diamond Offshore (DO -4.4%) and Vantage Drilling (VTG +0.6%), as utilization rates look "deceptively healthy" and on par with 2014 year-end levels, but the average jack-up contract length signed this year is for an average of only 199 days per rig vs. an average 438 in 2014 and 467 in 2013.
- In floaters, the firm says current utilization of 89% vs. 90% at the end of 2014, with ultra-deepwater rigs holding at 89%, but numbers could fall sharply in the next few months, as up to 24 new floaters could enter the market in 2015 and existing contracts for active rigs continue to be exposed to early terminations.
- FBR believes RDC offers an attractive risk/reward profile to patient investors, given the driller's portfolio dominated by the world's largest high-spec jackup fleet and four state-of-the-art ultra-deepwater drillships, as well as the highest probability takeout in the space; nevertheless, the firm cuts its price target to $30 from $36.
- On the other end, the risk of contract re-negotiations and older rig withdrawals keeps FBR more skeptical about the short- and medium-term prospects of drillers like ESV and DO, and they believe that highly leveraged, pure-play names like VTG remain the most exposed to further macro deterioration.
Fri, Mar. 6, 4:41 PM
- Vantage Drilling (NYSEMKT:VTG) says it plans to extend purchases of its own debt at steep discounts this year as a way to save on interest costs, and expects $10M-$12M in gains during Q1 from what it already bought and retired early.
- Without putting more rigs under contract, "I need to maintain liquidity because that asset will not be contributing to cash flow,” CFO Douglas Smith said on today's earnings conference call.
- Rig owners such as VTG are confronting a glut of new vessels at a time customers are canceling work because of falling crude prices.
Fri, Mar. 6, 6:01 AM
Thu, Mar. 5, 5:30 PM
Fri, Feb. 13, 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."
Tue, Feb. 3, 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.
VTG vs. ETF Alternatives
Vantage Drilling Co is an international offshore drilling company engaged in contract drilling units, related equipment and work crews, on a dayrate basis to drill oil and natural gas wells for its customers.
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