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What Happened in September in the Offshore Drilling Space?

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The offshore drilling industry experienced many events in the first half of September 2017. Seadrill (SDRL) filed for Chapter 11 bankruptcy. The company will inject $1.0 billion in new capital. To know more details about the bankruptcy, read Market Realists’ series Seadrill Stock Rose 20% despite Bankruptcy.

Pacific Drilling was delisted from the NYSE (New York Stock Exchange) since it no longer met NYSE standards of market capitalization. Its average market capitalization was less than $15.0 million over a 30-day trading period.

Ensco secured a new contract for its drillship ENSCO DS-7 with Noble Energy. The drillship will work on four production wells and drill two wells in the Mediterranean Sea. The contract is expected to commence in March 2018.

After looking at some of the events from the first half of September, we’ll now see the stock performance of offshore drillers in that period.

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Stock performance

Following are month-to-date stock returns as of September 14, 2017:

  • Rowan Companies (RDC): rose 13.0%
  • Transocean (RIG): rose 12.8%
  • Diamond Offshore Drilling (DO): rose 20.0%
  • Noble Corporation (NE): rose 19.0%
  • Seadrill (SDRL): rose 45.4%
  • Ensco (ESV): rose 18.1%
  • Atwood Oceanics (ATW): rose 18.7%

Series focus

In this series, we’ll look at Wall Street analysts’ recommendations and ratings for offshore drilling companies and how analysts revised those ratings in August. Analysts’ estimates usually lag behind price movements, so we see upgrades when stocks have already risen and downgrades when companies have already seen lower prices.

That being said, changes in analysts’ estimates are key drivers of short-term price movements. You should keep track of changes in analysts’ estimates because they offer insights into what the market expects from a given company.

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