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
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