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  • Update: Awilco Drilling Earnings [View article]
    The senior offshore drilling analyst at Fearnley Securities acknowledges another outstanding quarter but cautions and has moved SPS costs well ahead of management guidance. The analyst has proved to be right in the past so certainly worth considering. However, management of AWDR have also performed well ahead of expectations since the opportunistic acquisition of these unloved rigs back so don’t write them off yet.

    They can maintain current dividend of US$ 1.15/sh/quarter) through 2015. For 2016 Fearnley estimates the dividend will come down to 20 cents per share per quarter, which still equates to 5% yield at the current share price.

    Fearnley sees cash flow supporting current dividends through 2015. With 60 days off for yard stay at US$20m (budget) per rig for the SPS in mainly 2016, they do not see cash or cash flow support for dividends in 2016 and assuming quarterly dividends of 20 cents/sh in 2016, they estimate a need for US$50-60m new debt.
    For 2016 they assume AWDR to carry gross debt of ~USD 150m (current equity is US$204m) which is manageable depending on backlog for WilHunter. WilPhoenix is on firm contract through 2017.

    The company guides on cost for the upcoming special periodic surveys (SPS) in late 2015/early 2016 of US$20m/rig. As this is significantly below that achieved by peers like FOE Fearnley is adding a buffer of US$15m/rig – cautious bunch!

    They expect the WilHunter to secure follow-up work when rolling off firm contract in late 2015 but project a lower US$250k per day rate.

    Fearnley predicted the driller downturn sooner than most – so worth considering.
    Nov 13, 2014. 12:39 PM | 1 Like Like |Link to Comment
  • Drilling For Contrarian Value In Oil And Gas: Consider Oceaneering [View article]
    Excellent, well considered article, thank you.
    Oct 10, 2014. 03:45 AM | Likes Like |Link to Comment
  • National Oilwell Varco: Offshore Slowdown Concern Is A Gift [View article]
    Thanks for the article.
    Looks great value at current levels given market dominance and cash set to flow over the next few years.
    Mar 14, 2014. 01:12 PM | 1 Like Like |Link to Comment
  • Discussion Of A Long-Term Investment In Ensco Plc [View article]
    Thank you for the great report.
    I can't quite understand ESV's obsession with dividend distribution over stock buyback, if the shares are such good value!
    If yield is a key criteria a lot of the Norwegian drillers look more attractive
    For a modern fleet go for PACD, ORIG or even Seadrill (with a near 10% yield)
    For consistent delivery go for ATW
    ESV seems to be ranked 'average' in most areas....although I also admit to being a fan!
    Feb 12, 2014. 12:21 PM | 1 Like Like |Link to Comment
  • Awilco Drilling Is The World's Most Undervalued Company [View article]
    There is an excellent note from Oslo broker Fearnleys on implication of UK tax hike for the offshore drillers and accommodation provider Prosafe (9% yield)

    UK Government late last week proposed changes to tax related to bareboat structures on oil and gas assets that are chartered for use on the UKCS. The UK Government will cap deductibles for intra-group leasing payments (bareboat-charters) and introduce a ring-fence to protect the resulting revenue. The new tax structure will be introduced from April 2014. The final bill is not ready, yet. UK Government will consult with the industry in early 2014. Nevertheless changes, negative that is, are on its way.

    In brief: tax deductibles will be capped at max 4% of historical capital cost per annum (maintenance proxy) + allowance for possible financing cost set at 5% of borrowing up to 50% of cost. A ring fence will be put in place to ensure that profits will not be able to be reduced by other tax reliefs derived from activity outside UKCS. The tax proposal is relevant for all large offshore assets being leased into UK, with the definition of large offshore assets being assets with value USD 2m.

    As we understand it impact can be tax of up to 20% (a worst-case scenario) vs. as low as a couple of %’nt today. There are large differences in company tax structures across our coverage universe. Country based tax granularity is not provided by most companies. As we see it though most companies has a current UK tax base of ~5-10%. Impact will vary based on structure as well as deductible tax base

    Ironically the worst affected is Awilco Drilling which is a UK PLC!
    Dec 13, 2013. 10:18 AM | 1 Like Like |Link to Comment
  • Awilco Drilling Is The World's Most Undervalued Company [View article]
    Absolutely, management recently stated that rigs have 17 year fatigue life. There is quite a lot of coverage here going back to DEec 2012
    Oct 25, 2013. 09:20 AM | Likes Like |Link to Comment
  • Awilco Drilling Is The World's Most Undervalued Company [View article]
    Oslo is 'the' 'decent exchange' for offshore drilling groups!
    Oct 25, 2013. 09:16 AM | Likes Like |Link to Comment
  • Awilco Drilling: A Sustainable 22% Dividend [View article]
    Thank you for a great article and interesting discussion.
    Worth noting that operational risk is reduced in that Awilco's activity for Hess is abandonment related which is lower risk but still brings the same day rates!
    For those interested in high yielding Norwegian drillers Oslo listed Northern Offshore Ltd (NOF) yields approx 14%. Fleet x 1 semi, x1 drillship, x 2 jackups, x1 semi production platform.
    Note 33% ownership by John Fredrikson (SDRL) vehicle..hence the dividend!
    Aug 28, 2013. 12:39 PM | Likes Like |Link to Comment
  • National Oilwell Varco: An Undervalued Growth Story [View article]
    Thank you for the excellent article.
    I am also a big fan of NOV.
    Declining op margins on Rig Tech have been a disappointment but hardly disastrous.
    Given their robust balance sheet. modest gearing and (typically) excellent cash flow the overly prudent distribution policy has also been somewhat disappointing
    I remain of the view that patience will be rewarded!
    Aug 8, 2013. 04:48 AM | 3 Likes Like |Link to Comment
  • Awilco Drilling - High Seas Dividends Make This Driller A Long [View article]
    Both Sevan Drilling and Songa Offshore have major balance sheet/funding issues therefore comparison with modestly geared AWDR is irrelevant.

    Sevan needs funding for its 2 UDW rigs under construction. One leading analyst sees its cash running out in Q4 of 13 with refinancing required as soon as possible to avoid a new equity issue, although there is the possibility of refinancing debt based on backlog.

    On Awilco net assets at 31st March 2013 were US$203m, with total assets US$343m, which includes rigs in the books at US$249.m Net debt was US$66m – representing net gearing of a modest 32%

    The current rig replacement value is approximately US$250m per rig or US$500m in total which is US$251m more than the current 'book' value. The effective replacement NAV is therefore approx US$454m which compares with current market cap of approx US$480m.
    Jun 18, 2013. 09:28 AM | 2 Likes Like |Link to Comment
  • Pounding The Sand For Hi-Crush Partners LP [View article]
    Excellent article which greatly added to my knowledge of the stock and sector..I also support those erudite comments of Mr Trinder
    Jun 10, 2013. 05:04 AM | Likes Like |Link to Comment
  • Awilco Drilling - High Seas Dividends Make This Driller A Long [View article]
    Yes, 2 operating assets but it's worth noting that the Group's current activity for Hess is abandonment work so much lower same day rates!
    Jun 7, 2013. 05:25 AM | Likes Like |Link to Comment
  • Awilco Drilling - High Seas Dividends Make This Driller A Long [View article]
    Not sure of your location but you can buy through IG Markets. I arecent commentary from Investors Champion also supported
    Jun 7, 2013. 05:24 AM | Likes Like |Link to Comment
  • Songa Offshore: A Fallen Angel With The Potential To Deliver Enormous Returns [View article]
    Nice write up but I am inclined to agree with comments from Think Twice.
    The relationship and support of Statoil is absolutely key to their future survival. They were forced to sell the crown jewels (Eclipse) for a knock down price and another fund raising surely looms
    Dec 17, 2012. 09:47 AM | 1 Like Like |Link to Comment
  • Carbo Ceramics Revisited: An Alternative Natural Gas Play [View article]
    Excellent article.
    If you are looking at CRR, doesn't U.S. Silica Holdings (SLCA) look more compelling?
    Nov 9, 2012. 08:44 AM | 1 Like Like |Link to Comment