Weekly Performance Update On 6 Offshore Drilling Stocks

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Includes: ATW, DO, ESV, NE, RIG, SDRL
by: Power Hedge

The market showed considerable improvement this week. The S&P 500 opened at 1281.34 and closed at 1325.66, an increase of 3.46%. Oil prices also increased, but showed more volatility. Oil prices increased until midday on Thursday, when the prices began to fall. Prices fell into Friday and then rebounded somewhat. Overall, oil did close the week at a higher price than it opened the week with but it did not follow the same steady increase that the S&P 500 did. The six offshore drilling companies that I follow in these updates all reacted somewhat differently to the market movement though.

SeaDrill (NYSE:SDRL) opened on Monday, June 4 at $31.78. The stock closed at $33.81 in after hours trading on Friday, June 8. SeaDrill shareholders thus saw a gain of $2.03 or 6.39% this week. SeaDrill opened at $35.88 on May 14, 2012. This gives the stock a four-week loss of $2.07 per share or 5.77%. SeaDrill went ex-dividend on May 22, 2012. Shareholders as of that date will receive a dividend of $0.97 which consists of a $0.82 per share regular dividend and a $0.15 per share special dividend. Therefore, the four-week loss is $1.10 or 3.07% when the dividend is included in the return.

SDRL 5-Day Chart

Source: Fidelity Investments

SDRL 4-Week Chart

Source: Fidelity Investments

Ensco (NYSE:ESV) opened at $44.19 on Monday, June 4. The stock closed at $44.23 in after hours trading on Friday, May 25. This gives the stock a gain of $0.04 or 0.10% over the week. The stock opened at $48.13 on May 14. The stock thus had a loss of $3.90 or 8.10% over the four-week period. Ensco went ex-dividend on June 7. Shareholders as of that date will receive a payment of $0.375 per share. When this dividend is considered, Ensco shareholders saw a gain of $0.415 or 0.94% this week. Shareholders in the stock also would see a loss of $3.525 or 7.32% over the four-week period when the dividend is considered.

ESV 5-Day Chart

Source: Fidelity Investments

ESV 4-Week Chart

Source: Fidelity Investments

Transocean (NYSE:RIG) opened at $40.62 on Monday, June 4. The stock closed at $42.11 in after hours trading on Friday, June 8. Transocean thus had a gain of $1.49 or 3.67% this week. The stock opened at $44.92 on May 14. This gives Transocean a loss of $2.81 or 6.26% over the four-week period.

RIG 5-Day Chart

Source: Fidelity Investments

RIG 4-Week Chart

Source: Fidelity Investments

Diamond Offshore (NYSE:DO) opened at $57.72 on Monday, June 4. The stock closed at $59.90 in after hours trading on Friday, June 8. This gives the stock a gain of $2.18 per share or 3.78% for the week. The stock opened at $62.15 on Monday, May 14. The stock thus had a four-week loss of $2.25 per share or 3.62%.

DO 5-Day Chart

Source: Fidelity Investments

DO 4-Week Chart

Source: Fidelity Investments

Atwood Oceanics (NYSE:ATW) opened at $37.02 on Monday, June 4. The stock closed at $39.28 in after hours trading on Friday, June 8. This gives the stock a gain of $2.26 per share or 6.10% for the week. Atwood opened at $39.65 on May 14. Thus, shareholders in the company suffered a loss of $0.37 or 0.93% over the four-week period.

ATW 5-Day Chart

Source: Fidelity Investments

ATW 4-Week Chart

Source: Fidelity Investments

Noble Corp (NYSE:NE) opened the week at $30.66 on June 4, 2012. The stock closed at $31.65 in after hours trading on Friday, June 8. This gives the stock a gain of $0.99 or 3.23% for the week. Noble opened at $33.92 on May 14, 2012. Thus, the stock had a four week loss of $2.27 or 6.69% over the four-week period.

NE 5-Day Chart


Source: Fidelity Investments

NE 4-Week Chart

Source: Fidelity Investments

SeaDrill was the best performing stock of these six over the past week with Atwood Oceanics in a close second. Ensco was the worst performer of these six over the last week. However, shareholders in every one of these six stocks saw the value of their holdings increase during the week. Atwood Oceanics was by far the best performer of the six over the trailing four week period even when accounting for dividends paid by a few of the companies. All six companies experienced a share price decrease over the period. Atwood was relatively flat though, declining only 0.93% compared to the 3-8% of its peers. Ensco was the worst performer over the trailing four week period even after accounting for the dividend. The fundamentals for the offshore drilling sector remain quite strong and the market is most certainly not reflecting that. The market environment over the past month has made all of these stocks significantly cheaper than a month ago. The overall industry fundamentals, however, have actually improved during the same time period. This could be a buying opportunity.

Disclosure: I am long SDRL.

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