Folks, sorry to inform you here, but the business model is broken. DVR is not now nor will they ever make a profit.
Look at the utilization on their equipment, too much excess old #$%$ like DVR's around the world.
But Mexico will save them, LOL.
DVR is one bad Mexican contract away from bankruptcy. They wil get a bad contract, they will blame it on the weather or cost changer or labor problems or under-estimation but there is a reason they are getting this contracts, they are UNDERBIDDING them!
Are you people really naive enough to think DVR can underbid PROFITABLY their Mexican competition?
Do a little research, here is a hint, check out Grupo Diavaz.
Folks, do your homework, Ask Billy Lam about dealing in Mexico, where do you think a lot of DVR's equipment came from, Horizon Offshore, how did DVR get it, Horizon went bankrupt, how did Horizon go bankrupt...bad contracts in Mexico, cost over-runs, change orders till Chapter XI.
Amen, brother....DVR is sinking fast. I don't get why people think more debt could be a good thing. Plus, the rate is LIBOR plus a billion points!! How could taking on more debt be a good thing for this garbage company?!?!?
Horizon didn't go bankrupt, DVR bought them. The stock is doing ok because the forward guidance was good and the CEO was talking about the GOM market getting a little better with more pipelay opportunities for the first time since Macando. Yes, Q1 was a loss, but it also was the first Q1 to have positive EBITA in 5 years. Lots of Risks, including Mexico, but what's the point of screaming fire on a $1 stock ?. Anybody buying a $1 stock should expect a lot of warts and a lot of risk.
As you point out, there are definitely risks. Here are some of my thoughts:
1) Post Macondo, DVR has failed to make a profit. However, pre Macondo, they were making decent profits and the stock traded in double digits. Will they be able to return to profit? Of course, that is the question. Looking at the trends for the past few quarters, things seem to be going in the right direction.
2) I, too, worry that they have a lot riding on one customer (PEMEX/Mexico). There is definitely a risk if something goes wrong with one of their projects with them.
3) Much of the offshore construction companies have had difficulties being profitable on their fixed price contracts (MDR comes to mind). Can DVR deliver their fixed price projects (PEMEX in particular) profitably? That is another good question. I think the macro offshore business environment has a hand in this - and it seems to be improving.
4) DVR competes with a number of vendors on their bids for projects, including Grupo Diavaz for the Mexico work. There is approximately $800 million in work that PEMEX is putting to bid this year - about the same as last year. DVR has had approx. 20% success rate in their bids for PEMEX work. There is a lot of factors that go into bidding for these projects (vessel availability, type of work, expertise, etc.). I don't think it is as simple as DVR underbidding GD just to win the projects.
5) Backlog and profitability has been going in the right direction over the past year. Headwinds is the amount of debt they had to take on during these down years.
In summary, there are a number of risks with DVR - which is why the share price has dropped from the low teens during the good years (pre Macondo). I believe the inter-company and macro business factors are going in the right direction lately. If they continue to improve, the share price should start heading back up. If they run into problems or the macro picture turns back down, the sp will suffer.