uploads/2018/06/oil-rig-sea-oil-gas-drill-2191711-1.jpg

Comparing Ensco’s Backlog with Transocean and Diamond Offshore

By

Updated

Backlog

Since the downturn started, offshore drilling companies have had a hard time securing contracts. Day rates have dropped to some of the lowest levels in the last several years. Offshore drilling companies are utilizing their backlogs quicker than they’re replenishing them through new contracts. As a result, investors should look at how the backlogs changed for various offshore drillers.

How’s a backlog calculated?

A company’s backlog is calculated as the predetermined day rate of the contract multiplied by the contract duration. The backlog helps us understand where the company’s revenues could head in the future.

Comparing backlogs

  • As of March 31, Ensco (ESV) had a total contracted backlog of $2.7 billion—compared to $3.8 billion as of December 31, 2017. The decline in the company’s backlog was due to realized revenues during the first quarter, which were partially offset by contract extensions and new contract awards.
  • As of April 18, Rowan Companies (RDC) had a backlog of $379 million—down from $456 million in February. The company’s backlog excludes the backlog associated with ARO Drilling.
  • As of April 1, Diamond Offshore Drilling (DO) had a backlog of $2.17 billion—compared to $2.4 billion on January 1 and $3.2 billion on April 1, 2017.
  • As of March 31, Noble (NE) had a backlog of $2.79 million—down from $3 billion at the end of the previous quarter.
  • As of April 18, Transocean (RIG) had a backlog of $12.5 billion—compared to $12.8 billion in February.

Next, we’ll compare five offshore drilling companies’ 4Q17 revenues.

More From Market Realist