Rowan Companies PLC

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

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.

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

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.

In September, after months of speculation that Rackspace could be acquired by CenturyLink, Inc. (CTL) and had interest from Hewlett-Packard, the company said it was no longer exploring merger and acquisition options. On the contrary, the company declared its commitment to remain independent.

On July 2, a Reuters survey showed that OPEC’s crude oil production increased by 320,000 bpd (barrels per day) to 32,320,000 bpd in June.

The offshore drilling industry experienced many events in the first half of September 2017. Seadrill (SDRL) filed for Chapter 11 bankruptcy.

Of the 38 analysts covering Transocean, 5% have given it a “buy” recommendation, while 32% have given it a “hold,” and 63% have recommended a “sell.”

Reuters estimates that Saudi Arabia’s crude oil production increased by 700,000 bpd to 10,700,000 bpd in June—compared to the previous month.

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.

Even after week 21’s fall in stock price, Seadrill still has a whopping 82.8% year-to-date return as of May 25.

In 1Q16, Transocean (RIG) had cash flow from operations of $631 million, which was lower than the $960 million it had in 4Q15.

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.

On November 30–December 7, Superior Energy Services (SPN) fell the most on our list of energy stocks.

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.

On December 7–14, upstream stock Carrizo Oil & Gas (CRZO) fell the most on 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).

WTI crude oil prices fell 8.2% on June 29–July 17. August WTI oil futures contracts rose 0.03% to $68.08 per barrel on July 17.

Ensco (ESV) released its quarterly fleet status report on July 19. Ensco 8503 secured a 100-day contract with Talos Energy in the US Gulf of Mexico.

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 […]

In this series, we’ll discuss analysts’ ratings and recommendations for offshore drillers.

Baker Hughes is scheduled to release its US crude oil and natural gas rig count report on November 11, 2017.

Rowan’s jack-up revenue in 2Q16 fell to $264 million, from $272 million in 1Q16. Its jack-up fleet had 108 higher operating days, but the average day rate declined.

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.

First quarter results beat estimates despite a decline in earnings and revenue.

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.

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.

The company missed on 4Q13 earnings and revenue back in February.

For Noble Corporation, 63% of total revenue comes from ultra-deepwater floaters. Also, 16% of revenue comes from deepwater floaters and 21% from jack-ups.

I believe this stock could double over the next year from $20 to $40 as it’s rerated due to the lucrative MLP structure.

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

Between September 14 and 21, upstream stock Southwestern Energy Company (SWN) gained the most on our list of energy stocks.

Blue Harbour Group was founded in 2004. It manages capital on behalf of pension funds, endowments, and other institutional investors.

DeVry University has seen revenue fall in previous fiscal years due to a decrease in new and total student enrollments. The decline is expected to continue into fiscal year 2015.

Rowan Companies plc is a global provider of contract drilling services in the ultra-deepwater and shallow water jack-up market. It has a fleet of 34 offshore drilling units, including four ultra-deepwater drillships, all of which are currently under long-term contracts.

Between January 18 and January 25, oilfield services stock Weatherford International rose the most among the energy stocks under review in this series.

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

The US offshore rig count in Week 30, which ended July 27, was 16, one less than the previous week and eight less YoY (year-over-year).

According to Noble’s latest fleet status report, the company has secured two contracts and one contract extension for its jackup rigs.

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.

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 29, which ended on July 20, all offshore drilling stocks traded in the red. Seadrill (SDRL) fell the most.

Analysts’ consensus rating for Noble is 3.2 on a scale of 1 (“strong buy”) to 5 (“strong sell”), meaning “hold.”

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.

Earlier in this series, we analyzed and compared the business fundamentals of different offshore drilling companies. Now we’ll look at the technical indicators for these offshore drillers (XLE).

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.

On July 6–13, upstream stock Sanchez Energy (SN) saw the highest gain on our list of energy stocks.

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

US gasoline futures rose 0.6% to $2.13 per gallon on July 5 due to the larger-than-expected drop in gasoline inventories.

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.

Between April 20 and April 27, oilfield services stock Ensco (ESV) fell the most on our list of energy stocks.

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.

On February 23–March 2, 2018, upstream stock California Resources (CRC) was the largest loser on our list of energy stocks.

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

As of December 31, 2017, Diamond Offshore had long-term debt of $1.97 billion—compared to $1.98 billion in the previous year.

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.

Slumping oil prices have put offshore drillers (IYE) under financial pressure. The first victim of this pressure has been dividends.

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.”

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

Of the 32 analysts covering Diamond Offshore Drilling (DO), only 9% recommend a “buy” or equivalent for the stock.

Of the 32 analysts covering Ensco, 47% recommend a “buy” or some equivalent for ESV stock.

The US offshore rig count stood at 19 in the week ended December 22, 2017.

In November 2017, one drilling permit was issued in the shallow waters of the Gulf of Mexico.

In October 2017, the international offshore rig count was 204—down 14 rigs from 190 in the previous month.

Baker Hughes, a GE company, is scheduled to release its US crude oil and natural gas rig count report on December 1, 2017.

The US offshore rig count for the week ending November 10, 2017, was 18, unchanged from the previous week.