Rowan Companies’ (RDC) year-to-date return was -22.6% as of December 12, 2017. The stock has underperformed its peer Diamond Offshore Drilling (DO), which had a -3.5% return YTD. Rowan Companies has, however, outperformed most of the other offshore drilling companies.
Rowan Companies stock significantly underperformed the broad equity market indexes. The Dow Jones Industrial Average (DJIA-INDEX) has risen 23% YTD as of December 12, 2017. The SPDR S&P 500 ETF (SPY) has risen 18.7% during the same period.
Although Rowan Companies has a negative year-to-date return, its last three-month performance has been excellent, with the stock rising 22.5%.
Rowan Companies has a fleet of 26 offshore drilling rigs, with 22 jackup rigs and four ultra-deepwater drillships. The company’s fleet operates in the United States Gulf of Mexico; the United Kingdom; and the Norwegian sectors of the North Sea, the Middle East, and Trinidad. In addition, the company is a 50-50 venture partner with Saudi Aramco. The venture owns a fleet of four jackups in the Arabian Gulf.
Performance in 9M17
Rowan Companies had revenue of $986 million in the first nine months of 2017. That’s 34% lower than the same period last year. Its backlog in October 2017 was $739 million compared to $1.7 billion at the start of 2017 and $2.2 billion a year ago in October 2016. RDC recorded a net loss of $36 million for the first nine months of 2017 compared to $345 million in the same period in 2016. In October 2017, ARO Drilling, a 50-50 joint venture with Saudi Aramco, began operations. The company believes this joint venture will provide solid visible earnings growth for the next decade. The company also believes the ARO Drilling venture has a positive impact on the company’s liquidity.
In the next part of this series, we’ll look at the performance of Noble Corporation (NE).