Seadrill Ltd

Pacific Drilling’s (PACD) operating expense-to-revenue ratio stood at 37.5% at the end of 3Q16, similar to the previous quarter’s 37.3% and 3Q15’s 37.7%.

Wall Street analysts estimate revenues of $270 million in 3Q15 for Pacific Drilling (PACD)—close to the $274 million revenue earned in 2Q15.

Transocean (RIG) plans to release its 1Q17 results on May 3, 2017, after the market closes.

Many offshore drillers have scrapped their older rigs to reduce costs. Although scrapping rigs reduces costs, it also negatively impacts the earnings potential of the company.

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

Seadrill will release its 1Q17 results on May 24. In 4Q16, Seadrill’s revenue was $667 million—nearly 10% lower than revenue of $743 million in 3Q16.

Analysts expect Transocean’s (RIG) 3Q17 EBITDA to fall to $313 million—a 10% fall from $349 million reported in 2Q17 and a 31% fall year-over-year.

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).

On January 31, 2017, Seadrill (SDRL) had the highest implied volatility among the OFS (oilfield equipment and services) companies 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.

On April 10, 2017, Seadrill had the highest implied volatility among the OFS (oilfield equipment and services) constituents of the VanEck Vectors Oil Services ETF (OIH).

In May, no drilling permits were issued in the shallow waters of the Gulf of Mexico. In the first five months of 2018, only two were issued.

Analysts expect a fall in Ensco’s (ESV) EBITDA for 3Q16. Analysts’ estimate for Ensco’s EBITDA in 3Q16 is $221 million—a 58% fall from $532 million in 2Q16.

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.

On March 31, 2017, Atwood Oceanics (ATW) had a backlog of $400 million, which was ~60% lower than the $1 billion it reported on March 31, 2016.

Of the 28 analysts covering Ensco, three analysts gave “strong buy” recommendations, while eight analysts gave “buy” recommendations.

Seadrill (SDRL) still has 14 rigs under construction including four drillships, two semisubmersibles, and eight jack-ups.

Seadrill’s 2Q16 results are expected to be released on August 25, 2016. The company’s stock has fallen 19% since the start of the year.

In the week ending December 15, 2017, offshore drilling stocks had mixed returns. Seadrill was the best performer, while Ensco was the worst performer.

Seadrill (SDRL) plans to release its 2Q17 results on August 24. In 1Q17, Seadrill’s revenues totaled $569 million, nearly 14.6% lower than its 4Q16 revenues of $667 million.

Offshore drilling stocks had mixed returns in Week 30, which ended July 27. The best performer was Seadrill (SDRL).

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

Last week Ensco (ESV) announced its decision to acquire Atwood Oceanics (ATW) in an all-equity transaction.

After Pacific Drilling released its 3Q16 earnings, no Wall Street analysts either upgraded or downgraded its stock, unlike Diamond Offshore and Rowan Companies.

In its 1Q17 conference call, Rowan Companies (RDC) shared its outlook on the offshore drilling market.

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.

In its 2Q17 earnings conference, Whiting Petroleum lowered its capex for 2017 from $1.1 billion to $950 million. Its capex was ~$554 million in 2016.

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 the week ending September 29, 2017, almost all of the offshore drilling stocks traded in the green.

Even though all offshore drillers traded in the red this year, we’re still going to analyze the top five YTD returns of companies in the industry.

August didn’t bring any good news for the offshore drilling industry. All stocks had negative returns, and no company predicted a turnaround, at least in the near term.

As of February, 2017, Transocean (RIG) had a backlog of $11.3 billion compared with $12.2 billion at the end of 3Q16.

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.”

Offshore drilling companies are capital-intensive and have varying degrees of financial leverage. Thus, we use the EV-to-EBITDA multiple as a valuation.

Noble Corporation Plc. (NE) is one of the largest off-shore oil drilling companies in the world, owning the second-largest fleet of Mobile Offshore Drilling Units (or MODUs) in the industry.

Transocean’s (RIG) revenue fell to $1.6 billion in 3Q15 from $1.8 billion in 2Q15. Its EBITDA also fell 13% to $655 million, from $755 million in the previous quarter.

Rowan Companies has agreed with Saudi Aramco to name the new joint venture ARO Drilling.

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.

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

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).

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

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.

On February 21, 2017, Seadrill (SDRL) had the highest implied volatility among the OFS companies that are part of the VanEck Vectors Oil Services ETF (OIH).

Last week (ended June 16), Atwood Oceanics was the worst-performing offshore drilling stock, while Rowan was the only stock among peers to see gains.

Older vessels are less fuel efficient and are costly to maintain. Insurance rates also increase with a rig’s age, increasing operating costs.

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

In the last four quarters, CARBO Ceramics’ revenue fell 48.8%. Its adjusted operating loss was $27.8 million in 4Q16—compared to $32.3 million in 4Q15.

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

In its 1Q16 report, Seadrill (SDRL) provided insights on the industry orderbook.

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.

Seadrill’s (SDRL) stock price fell more than 84% from the beginning of 2017 to May 18, 2017. The stock fell more than other offshore drillers.

Pacific Drilling (PACD) filed for Chapter 11 bankruptcy protection in an aim to restructure roughly $3 billion in debt.

With pressurized supply and demand conditions in the offshore drilling market, Ocean Rig does not see any recovery before 2020.

On March 14, 2017, Seadrill (SDRL) had the highest implied volatility among OFS companies that are part of OIH. Its implied volatility was 138.8%.

The offshore drilling industry has had low day rates and few or no new drilling contracts in the past year. Companies are alive mostly due to their earlier contracts.

Seadrill stock has skyrocketed. On May 17, the stock rose 26.1% and reached $0.58. The company’s volume increased to 69.3 million shares.

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%.

Cost-cutting measures In 3Q17, Transocean (RIG) successfully reduced its costs. Despite a fall in revenue, Transocean’s drilling-to-revenue ratio fell to 46% in 3Q17 from 47% in 2Q17. In 3Q16, the ratio was also 46%. Drilling expenses in 3Q17 Transocean’s operating and maintenance expenses fell $10 million in 3Q17, to $323 million. Guidance In its 3Q17 conference […]

For the first time in 2016, oil prices touched $50 per barrel on May 26.

In 3Q16, Seadrill’s (SDRL) earnings before interest, tax, depreciation, and amortization fell to $441 million, compared to $557 million in 2Q16 and $546 million in 3Q15.

According to Reuters, two analysts recommended a “buy,” five analysts recommended a “sell,” and one analyst recommended a “strong sell” for Seadrill.

Currently, 11 analysts give recommendations on Ocean Rig (ORIG). Of these, only one analyst, or 9%, has given the company a “buy” recommendation.

Transocean does not expect to see a recovery in rig activity before 2017 as customer budgets have been set for 2016 and are unlikely to improve soon.

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.

Noble’s capex requirement for 3Q16 is high with the delivery of its newbuild. So analysts expect free cash flow to be -$376 million in 3Q16.

Tidewater has fallen 31.7% in the past year. It has the highest implied volatility of all the oilfield services companies that make up OIH.

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.

Offshore driller stocks have risen significantly in December 2016. In this series, we’ll see how oil prices rose after the OPEC deal and how this increase could affect the offshore drilling industry.

Diamond Offshore Drilling’s (DO) 3Q17 revenue was $366 million, a fall of almost 8.2% from $399 million in 2Q17 and a 4.8% rise year-over-year.

On December 29, 2016, Seadrill (SDRL) announced that it has secured a three-year contract extension from Saudi Aramco for its jackup AOD III.

Seadrill Partners has beaten earnings estimates in the past four quarters. In 4Q15, SDLP’s reported EBITDA was 14% higher than estimates.

As of June 30, 2017, Seadrill (SDRL) has a total interest-bearing debt of $9.3 billion, similar to the previous quarter.

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

In 3Q16, Seadrill (SDRL) had cash flow from operations of $242 million, 20% lower than the previous quarter’s $303 million.

For Seadrill, two analysts recommended a “buy” and two recommended a “hold.” Five analysts recommended a “sell” and one recommended a “strong sell.”

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

To cope with this brutal downturn, offshore drillers have taken various steps to curb their costs including reducing their workforce.

The majority of offshore operations around the world occur in six key locations—the Gulf of Mexico, the Brazilian Coast, the West Coast of Africa, the North Sea, the Persian Gulf, and the Asia-Pacific region.

Billionaire David Einhorn is prominent in the hedge fund industry for his bold investment strategies.

The company currently trades for 6.9 times 2015 consensus EBITDA and $685 million per rig, which is a premium to its peers.

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).

Ensco’s second-quarter revenues were 2.45% higher than expected. The company’s EBITDA was 11.6% higher than the consensus estimates.

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

Dividend yield indicates how much a company pays in dividends relative to its share price. It’s calculated as the dollar value of dividends as a percentage of the stock price.

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.

Yesterday, US crude oil surged 3.2% to close at $72.76 per barrel—the highest level since November 2014. Oil prices rose after a significant drop in US crude oil supplies.

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

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

Most of the offshore drilling stocks traded in the green in the week ended June 1, returning 3.0%–6.5%.

As of May 30, Transocean (RIG) stock had a good run in the last three months. The stock rose more than 37% during this period.

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