Analyzing Ensco’s Backlog and Contracts

Ensco’s backlog

As of June 30, Ensco (ESV) had a total contracted backlog of $2.3 billion—compared to $2.8 billion as of December 31, 2017. The decline in the company’s backlog was due to realized revenues during the first quarter—partially offset by contract extensions and new contract awards.

Analyzing Ensco’s Backlog and Contracts

New contracts

  • Ensco 8503 secured a 100-day contract with Talos Energy in the US Gulf of Mexico. The contract is expected to start in November.
  • Ensco 115 was awarded a ten-month contract with Mabadala Petroleum in Thailand. The contract is expected to start in the first quarter of 2019.

Contract extensions

  • Ensco DS-12’s contract with Kosmos Energy Offshore got a 45-day extension.
  • Ensco 87’s contract with Fieldwood in the US Gulf of Mexico got a four well extension with an estimated 60-day duration.
  • Ensco 75’s contract with Talos Energy in the US Gulf of Mexico was extended by 90 days to December.
  • Ensco’s contract on Ensco 122 and Ensco 121 in the North Sea got a 90-day and 14-day extension, respectively.

Inference

From the Ensco’s latest fleet status report, we can infer that a recovery in the Jack-up segment is likely on its way. However, the recovery is still very slow. The Floater segment’s recovery isn’t very active.

Peers

In our series How Offshore Drilling Companies Stack Up in Today’s Market, we saw that Ensco has the lowest backlog among its peers. To compare the backlogs across companies, we calculated the backlog-to-TTM revenues. Ensco’s ratio is 168%, while Transocean (RIG), Diamond Offshore (DO), Noble (NE), and Seadrill Partners (SDLP) have ratios of 322%, 186%, 287%, 171%, respectively.