Saturday, November 9, 2013

Atwood Oceanics Q4 2013 Earnings

On November 7 after the market close, Atwood Oceanics Inc. (ATW) released its Quarter 4 earnings to the public.  The company reported Diluted EPS of $1.57 on revenues of almost $293 million.  Their EPS beat consensus estimates by $0.06.  Shares jumped 3.32% during trading on Friday, November 8.

Atwood’s is executing is goal perfectly to employ a high-specification fleet.  Revenues have risen 65% over 2011 levels and 35% over 2012.  This number should continue to rise as a result of higher day rates and a drilling fleet with increasingly high specifications.  In 2014, the company is set to add an additional two ultra-deewpater drillships to its fleet.  These are the rigs that result in the highest contract day rates.  Management is observing increasingly high demand, leading to increasing day rates, for the high specification jackup rig segment.  Concerning ultra-deepwater drillships, management has seen some cooling off of demand.  This, however, should not negatively affect the company’s day rates secured on its rigs coming due.

In the past quarter, Atwood finalized contracts for the sale of the Atwood Vicksburg and the Seahawk.  These were two of the company’s oldest rigs, and these actions are consistent with the plan to have newer and more improved rigs ready to be leased to customers. 

Management is expecting another strong year for FY 2015.  Not much has significantly changed from the past quarters and year with regards to the offshore drilling market.  Also, the company believes its marketing team can continue to pursue and secure new contracts and contract extensions for its rigs.

I would like to reiterate a BUY rating on this stock.  

-Nick Randone

No comments: