That will bring shares to new lows, as every 500 index fund will be forced to sell regardless of the prospects of the stock. This may be the opportunity, as RDC is one of the few offshore companies still liked by analysts and their contract coverage is quite good. The trick will be in guessing the bottom.
Hey ZD; Yes on both. I hope that the "activist" shareholder doesn't force RDC down the MLP path. Financial engineering hasn't done much for others and muddies the water IMO. I would like to see RDC hit it out of the park with fundamentals, up the divvy and move the stock price that way.
I am surprised at these prices RIG would not offer $45 for RDC instead of building new ships to fix their fleet. This industry needs to consolidate given the overhead in supply. Companies like Diamond and RIG should be buying VTG,PACD, and ORIG. Otherwise the industry destined to fail, too much supply in the long term with lower margins.
Very surprising there has been no real M&A since ESV bought Pride 3yrs ago.
RDC just about the only driller in the green today. With the news out and contracts locked in at pretty darn good rates, this ship may start a slow steam upward. Many other drillers would love to be in the position that Rowan is in right now.
Sentiment: Strong Buy
June fleet status is out and it seems the news I mention in the message above is not an issue - I'd still like them to have commented on it apparently not working at the moment.
If you do a google search for the rowan rennaissance, a couple of links down in the 'infield' link it says the rig hit dry patch and the explorer and rowan have decided to analyse the results before drilling again .. so it looks like the drilling has stopped since 13th june - not sure what this means, I'm guessing Rowan isn't getting paid ... the next fleet status is due out this week - should be interesting.
On Ensco's recent contract, CS says: This contract shows that premium
equipment can command higher dayrates even in the current market.
We continue to prefer high-spec pureplays during the unfolding downturn (favorite picks are North Atlantic Drilling (NADL), Ocean RigUDW (ORIG), Pacific Drilling (PACD), and Rowan (RDC)), and continue to deemphasize older fleets (Diamond Offshore Drilling and Hercules Offshore (HERO)).
Credit Suisse has an Outperform rating and $42 target on Rowan.
Recent comments (June 6):
Floaters Fully Fixed. With a contract in hand on its fourth and final newbuild,
RDC has removed any floater uncertainty until Q2 2017 – an enviable
position amongst its peers who are fighting for utilization, contracts and even
delaying newbuild deliveries. And the rate looks attractive especially given
the lower cost operations in the US GoM. We estimate the dayrate is ~15%
higher than this week's Falklands UDW contract when adjusting for cost
■ Fourth Newbuild Contracted. RDC announced today a $425M contract for
its 4th newbuild UDW drillship the Rowan Relentless with Freeport-McMoRan
in the US GoM. Backing out an assumed MOB we estimate the clean
dayrate is roughly $545K/day ahead of our recently reduced dayrate
estimate of $500K/day.
Sentiment: Strong Buy
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Enter symbol BLGO on Yahoo Finance “Stock Symbol” box to see full news release
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AOS will be commercialized within 12 to 18 months.
BioLargo (BLGO) shares are highly undervalued and are outstanding long-term hold for maximum appreciation.
Sentiment: Strong Buy
RDC sid they believe the rig can be operating again by being of June - within days of them releasing the fleet status report. The report came out relatively late - I think they thought they might get the rig operating again before issuing the report so it seems like it's a very fixable issue. They also mentioned something about getting spare parts or the like okayed ... they may have got lucky in that they had spare parts readily available - possibly from the rigs that are currently being built. In any case it's a bit of a baptism of fire - but no better way to tranin in a crew and they might have got off with it being a relatively cheap lesson.
Also - volume was 6M today - 3X Avg vvolume - don't knowwhat that's about - possibly a couple of mutual funds exchangeing shares but unusual.
Credit Suisse brought down their estimates a bit due to these issues; but they kept the target price and Outperform rating unchanged. They don't have love for many drillers, but they do love RDC.
As per today;s Fleet Status Report:
Rig commenced operations on April 22, 2014 for a three‐year term. The rig began experiencing issues with its subsea systems on May 19, 2014. The Company is working to rectify these issues and expects the rig to resume normal operations by the beginning of June 2014. During this period the Company may incur some amount of unbillable operational downtime. In addition, expected seven days off rate time in 2Q 2014 for commissioning of late arriving equipment.