Diamond Offshore Drilling Inc

Noble Corporation’s (NE) contract drilling revenue was $354.0 million in 1Q17 compared to $591.0 million in the same period last year.

Offshore drilling (XLE) (IYE) is a capital-intensive industry requiring a large amount of money to keep rigs active and well-maintained.

Tidewater’s (TDW) short interest-to-equity float ratio is 40.1%—the highest among the OFS stocks that are part of the VanEck Vectors Oil Services ETF (OIH).

The offshore drilling industry made headlines last week, especially Seadrill (SDRL), which reached a 52-week high of $0.73.

The Market has given a consensus rating of “sell” to Transocean (RIG). Of the 37 analysts covering the stock, only 5% have given it a “buy” recommendation.

Noble Corporation plans to release its 2Q17 results on August 3, 2017, after the markets close. It will have a conference call on August 4, 2017.

For the next five years, Noble needs to pay around $200 million–$300 million in debt every year. Then, the repayment for each year rises to around $400 million or more.

Currently, Diamond Offshore Drilling’s (DO) short interest-to-equity float ratio is 32.1%, the highest among the oilfield services stocks that are part of the VanEck Vectors Oil Services ETF (OIH).

Most offshore drilling stocks traded in the green in the week ended July 13. The best performer during the week was Noble.

Of the 32 analysts covering Ensco (ESV), 44% recommend a “buy” or equivalent for the stock.

In 4Q17, Transocean’s (RIG) costs increased. With a fall in revenue, Transocean’s drilling-to-revenue ratio rose to 66% in 4Q17 from 46% in 3Q17.

Seadrill and Diamond Offshore have more than 20 floaters in their fleets. Ensco and Rowan Companies have more jack-ups in their fleets than peers have.

Currently, Diamond Offshore Drilling’s (DO) short interest-to-equity float ratio is 30.5%. It’s the highest among the OFS stocks that are part of OIH.

The marine oil spill in April 2010 was the worst environmental disaster in US history, causing millions of barrels of oil gushed into the Gulf.

First Solar (FSLR) rose 5.7% yesterday after 195 nations attending the Paris climate change conference reached a historic agreement to cut emissions to address climate change.

In the week that ended on April 5, upstream stock Denbury Resources (DNR) rose the most among the stocks in the energy space.

In the first three quarters of fiscal 2015, Diamond Offshore Drilling’s net debt continued to rise while its share price fell sharply.

Baker Hughes reported that the US crude oil rig count fell by five to 744 on September 15–22, 2017. Rigs fell for the third straight week.

Excluding the effect of hedges, Apache Corporation’s (APA) average realized crude oil (USO) price in 4Q15 was $38.86 per barrel, down ~45% from $70.81 per barrel in 4Q14.

In 4Q17, Ensco’s EBITDA fell to $98.4 million from $149.5 million in 3Q17. The company’s EBITDA was 48% lower than its 4Q16 EBITDA of $190.0 million.

As of July 25, 2017, Transocean (RIG) had a backlog of $10.2 billion—compared to $10.8 billion in April 2017.

Oil is one of the most important and most frequently traded commodities, and offshore drilling is an integral part of the oil industry.

Diamond Offshore’s short-interest-to-equity float ratio is currently 40.7%—the highest among the OFS constituents of the VanEck Vectors Oil Services ETF (OIH).

Citigroup estimates that global crude oil supply outages could currently be around 3.5 MMbpd (million barrels per day).

Transocean’s drilling revenue for 1Q16 was $1.34 billion, ~28% lower than the $1.85 billion in 4Q15 and 34% lower than the $2 billion in revenue in 1Q15.

Of the 34 analysts covering Transocean, 44% recommend a “buy” or some equivalent for the stock, while 32% recommend a “hold.”

The bargaining power of offshore drilling customers is influenced by oil prices and utilization rates. When oil prices are high, rig capacity goes down.

March US crude oil (DBO) (UWT) futures contracts increased 1.8% to $65.61 per barrel on January 24, 2018.

Majority recommends “sell” Currently, 28 analysts give recommendations on Seadrill (SDRL). Of these, none have given a “buy” recommendation on the stock. Six analysts have given a “hold” recommendation, and 22 have a “sell” recommendation. The consensus target price is $1.78, which implies a downside of 17%. Like Seadrill, Ocean Rig (ORIG) does not have […]

Diamond Offshore Drilling’s short-interest-to-equity float ratio is currently 30.5%—the highest among the OFS stocks that are part of OIH.

Baker Hughes released its weekly oil and gas rig count report on November 10. It estimated that US oil rig counts rose by nine to 738 on November 3–10.

Between August 18 and 25, 2017, CVR Energy (CVI) was the largest gainer among our list of energy stocks.

Article focus In this article, we’ll discuss analysts’ target price revisions for offshore drilling companies in Week 8 of 2018 (ended February 23). Revisions in Week 8 Jefferies revised its target prices for two offshore drillers. On February 21, 2018, it reduced the target price for Transocean (RIG) to $12 from 413 and maintained a […]

Analysts expect a fall in Rowan Companies’ (RDC) EBITDA (earnings before interest, tax, depreciation, and amortization).

On August 22, Seadrill reported that it received a contract termination notice for its contract with Pemex Exploration Servicios on the rig West Pegasus.

A Bloomberg survey reported that that OPEC’s crude oil production increased by 484,000 bpd to 33.2 MMbpd in April 2016—compared to the previous month.

In the first three months of 2017, Ensco saw cash flows from operations of $104 million, as compared to $233 million in 1Q16.

High short interest in stocks such as Carbo Ceramics, Seadrill, and Noble could explain why they also have high implied volatilities.

CARBO Ceramics’ (CRR) short interest-to-equity float ratio is 28.6%—the highest among the OFS (oilfield equipment and services) stocks that are part of OIH.

Rowan Companies’ (RDC) direct operating costs were $166 million in 4Q17—above the previous guidance of $150 million–$160 million.

RDC’s analyst recommendations Analysts’ consensus rating for Rowan (RDC) is 2.6, which means a “hold.” Peers Transocean (RIG), Diamond Offshore (DO), Noble (NE), and Ensco (ESV) also have “hold” ratings. Of the 31 analysts covering Rowan (RDC), 39% recommend “buy” or some equivalent, 55% recommend “hold,” and 6% recommend “sell.” Among the top offshore drilling stocks […]

Transocean’s drilling-to-revenue ratio fell to 64% in the first quarter from 66% in the previous quarter. In the first quarter of 2017, the ratio was also 46%.

In terms of relative valuation, Rowan Companies (RDC) is currently trading at a 5.12 forward EV-to-EBITDA multiple as compared to the median industry multiple of 5.88.

In 2Q16, almost 70% of Seadrill’s total revenue came from the floater segment.
This segment’s revenue for fiscal 2Q16 was $610 million.

Analysts estimate that Pacific Drilling will have a free cash flow of -$16 million in the 2H15, compared to the $106 million it had in the 1H15.

Slack in the labor market implies that the available workforce is being underutilized. One of the indicators pointing to slack is the labor force participation rate.

Earnings estimates As we saw in the previous part, Wall Street analysts estimate Seadrill’s 3Q16 revenue will be 17% lower than the previous quarter’s revenue. However, analysts expect a 30% drop in its 3Q16 EBITDA (earnings before interest, tax, depreciation, and amortization). Analysts estimate Seadrill’s EBITDA will be $392 million in 3Q16, compared with $557 […]

In the first half of 2016, Ensco (ESV) had cash flow from operations of $800 million compared to $891 million in the same period last year.

Due to the deteriorating leverage and liquidity position, Standard & Poors lowered Diamond Offshore’s credit rating from A- to BBB+ in April 2015.

Like many of its competitors, Noble possesses a diversified fleet of rigs that are best suited to different situations and environments.

Ensco’s (ESV) revenue from continuing operations was $909 million in 2Q16, a 12% increase from 1Q16. Revenues exceeded the company’s guidance.

In Week 30, which ended on July 27, analysts revised their target prices for Ensco after its second-quarter results.

Transocean’s (RIG) ultra-deepwater semi-submersible GSF Development Driller I has secured an 11-well contract with Chevron (CVX) in Australia.

Transocean (RIG) released its second-quarter results yesterday after the markets closed. Let’s take a look.

In the first half of 2018, Ensco had negative cash flows from operations of $18 million—compared to its positive cash flow of ~$130.5 million the previous year.

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.

Diamond Offshore released its second-quarter results today before the markets opened. Let’s take a look.

Transocean (RIG) is set to release its second-quarter results today after the markets close. Let’s see what analysts expect.

In Week 28, RBC Capital, BMO, Evercore, and Susquehanna revised target prices for offshore drilling companies.

In this part of our series, we’ll compare Wall Street analysts’ consensus ratings for the offshore drilling companies we’ve been analyzing.

Along with a company’s long-term solvency, it’s important to look at its liquidity position.

Offshore drilling (XLE) companies are capital-intensive, so looking at their financial leverage is very important. The debt-to-equity ratio and net debt-to-EBITDA ratio show these companies’ financial leverage.

In the last part of this series, we saw which offshore drillers had the highest and lowest falls in their backlogs. In this article, we’ll compare offshore drillers’ backlogs versus their revenues.

Toward the end of 2014, oil prices took a dip and the offshore drilling industry entered into a brutal downturn. Since then, offshore drilling companies have had a hard time securing contracts.

During the week ended July 6, US crude oil August futures and natural gas August futures fell 0.5% and 2.3%, respectively.

Seadrill (SDRL) stock fell to a 52-week low of $0.10 on July 2—a fall of 52.5% from the previous day’s closing price.

In May, the international offshore rig count was 198, up by four from 194 in April.

In Week 25, which ended June 22, Jefferies downgraded one offshore driller and revised the target prices for others.

On June 22, three offshore drilling stocks traded at unusually high volumes, which led to prices rising.

Transocean’s (RIG) estimated second-quarter revenues are $764.5 million—15% above the previous quarter and 7.5% higher YoY.

In the first quarter, Ensco’s EBITDA fell to $91.3 million from $98.4 million in the fourth quarter of 2017. The first-quarter EBITDA was 45.3% lower YoY.

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.

In Week 4, which ended June 15, offshore drilling stocks fell along with oil prices ahead of OPEC ’s meeting scheduled for June 22.

The US offshore rig count in Week 24, which ended June 15, was 20, the same as the previous week.

On June 7, Noble (NE) released its June fleet status report. Most of the offshore drilling companies don’t publish a monthly fleet status report.

In the first quarter, Transocean’s (RIG) cash flow from operations dropped to $103 million from $244 million in the previous quarter.

Last week, the US offshore rig count was at 19, the same as it was in the previous week.

On April 30, Wells Fargo reduced the target price for Ensco to $5 from $6. In week 17, Susquehanna reduced the target price for Ensco to $5 from $5.5.

In week 18, Ensco and Seadrill were the best performers among offshore drilling stocks. Diamond Offshore was the worst performer.

None of the analysts revised their recommendation or target prices for offshore drilling stocks in week 12.

As of February 19, 2018, Transocean (RIG) had a backlog of $12.8 billion—up from $9.4 billion in October 2017.

On March 5, 2018, UBS reduced Rowan Companies’ target price to $17 from $18. On March 2, 2018, Wells Fargo cut the target price to $12 from $16.

As of December 31, 2017, Rowan Companies has long-term debt of $2.5 billion. The company doesn’t have any debt maturities in 2018.

In 4Q17, Rowan Companies’ (RDC) capital expenditure or capex was $22 million. The capex was lower than the previous estimate.

As of February 13, 2018, Rowan Companies (RDC) had a backlog of $456 million—down from $1.7 billion in February 2017.

Rowan Companies’ total drilling revenue for 4Q17 was $296 million—1.7% higher than $291 million in 3Q17.

Rowan Companies had the worst YTD returns as of March 9, 2018. The stock has fallen 23.2% since the start of the year.

As of December 31, 2017, Ensco (ESV) had a total contracted backlog of $2.8 billion compared to $3.6 billion as of December 30, 2016.

Ensco expects its 1Q18 revenues to fall 8.0% quarter-over-quarter due to lower revenues from Ensco DS-7 and Ensco DS-6.

Ensco (ESV) has the highest number of jack-up rigs among its peers.

In 2017, Transocean added two ultra-deepwater newbuild drillships—Deepwater Pontus and Deepwater Poseidon—to its fleet.

Seadrill Partners’ (SDLP) vessel and rig operating expenses fell 3% to $94 million in 4Q17 compared to $96.9 million in 3Q17.

As of January 1, 2018, Diamond Offshore Drilling (DO) had a backlog of $2.4 billion—compared to $3.5 billion on January 1, 2017.

Diamond Offshore Drilling’s total 4Q17 drilling revenue was $338 million—a fall of almost 6% from $357 million in 3Q17.

Diamond Offshore Drilling’s (DO) total revenue fell 5.4% in 4Q17 to $346 million—compared to $366 million in 3Q17.

In December 2017, no drilling permits were issued in the Gulf of Mexico’s shallow waters. In November, one drilling permit was issued.

Offshore drilling (IYE) companies are capital intensive, so looking at their financial leverages is very important.

Among the offshore drillers under our consideration in this series, Diamond Offshore Drilling (DO) has the highest credit rating by Moody’s at “Ba3.”

Natural gas rigs fell by one to 188 on January 19–26, 2018. US natural gas rigs were near the highest level since September 2017.

In this article, we’ll look at offshore drillers’ backlogs in comparison to their revenues.