Is Atwood Oceanics’ Backlog Cause for Worry?



Contract backlog

On September 30, 2016, Atwood Oceanics (ATW) had a backlog of $0.8 billion, ~50% less than the $1.6 billion reported a year ago. Knowing a drilling company’s backlog helps us to gauge its maximum revenue based on its current contracts.

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Backlog for 2017–18

The backlog for fiscal 2017 stands at $431 million, which is 43% of Atwood Oceanics’ fiscal 2016 revenue. If the company isn’t able to secure new contracts, revenue for fiscal 2017 will be only 43% of the 2016 revenue. Among the current contracts, only one of ATW’s contracts extends beyond fiscal 2017.

The backlog for 2018 stands at $233 million, which is 23% of the revenue for the past four quarters. Based on ATW’s backlog in the coming years, a steep fall in the company’s revenue is expected.

Backlog distribution

Atwood Oceanics’ backlog comes through ultra-deepwater, deepwater and jack-up rigs. About 99% of the backlog belongs to its ultra-deepwater rigs.

Peer backlog

Atwood Oceanics’ total backlog-to-trailing-12-month-revenue ratio stands at 80%, among the lowest in its peer group. Here’s where peers’ ratios stand:

  • Ensco (ESV): 122%
  • Noble (NE): 171%
  • Diamond Offshore Drilling (DO): 231%
  • Transocean (RIG): 242%

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