1. Sell all mid-water floaters, all jackups, and all deepwater rigs with contracts less than 2.5 years
2. Place remaining rigs with long term contracts into an MLP structure, with tax-free distributions to shareholders.
3. Eliminate at least $500 million in shorebased costs.
4. Reduce the size of the BOD
5. Streamline executive management
6. Seat 2 more activist investors on the BOD
I think the future looks pretty darn good for growth. Over the next couple of years deep water drilling looks pretty promising. You don't feel RIG will benefit from this? Also, what do you think the stock price is worth?
Absolutely the future looks good for growth. However, earnings estimates for 2014 RIG have gone down 10% in the past 90 days. Not so for companies like SDRL. Why have earnings estimates gone down, in the midst of one of the strongest markets in years? Earnings drive the stock price, and as long as RIG fails to deliver profits, the stock will not recover. They have an unsustainable cost structure, and much lower gross margins than the rest of the industry. Newman is blind to this basic fact.
#1, replace the word ALL with SOME (dependent on age, contract type and receivables history)
#2, doable, would unlock shareholder value -- see VLO
#3, will take years
#5, very doable
#6, not necessary