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Xyratex Ltd. (XRTX) Message Board

cben15606 23 posts  |  Last Activity: Sep 15, 2014 6:45 PM Member since: Dec 8, 2006
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  • quietly keeping rigs working. $120M backlog added this month and 2 more Mexico jackups rolliing off contract end of September in extension talks.

  • Reply to

    The Dividend

    by stockplusbonds Sep 13, 2014 10:08 PM
    cben15606 cben15606 Sep 14, 2014 2:27 PM Flag

    Not to dwell on it since Paragon will be issuing a PR in the next week or two but FYI, it was explained to me by Shea/IR that the $80-90M mentioned in their filing was done so to produce a similar yield as that of NE(5-6%). Because that at a then PGN share price of $17, an $80-90M payout would indeed produce that yield. So i do expect them to commit to a dividend though not an exact figure perhaps until their board meeting in November as pointed out to me by Shea/IR.

    However it is also possible that these things change in the near term. Presumably the crash in share price has already prompted Paragon to take measures at the very least to add color on their plans to return value to shareholders vis a vis their PR 2 days ago. Playing the guessing game, maybe they will be simply explaining to all shareholders what was explained to me. Or maybe they will state that because of the short term tax situation and depressed share price they will start with a lower payout, particularly since they have said they would like to be able to increase dividends with time. Other possibilities would be that they are moving the board meeting up or starting a share repurchase. In their own words: they "have money to spend". Just SWAGs

  • Reply to

    dividend question

    by chevymalibu1966 Sep 11, 2014 8:10 AM
    cben15606 cben15606 Sep 11, 2014 6:46 PM Flag

    Loews(L) owns 51% of the shares hence the low float. Dividend is paid on all 137 million shares or roughly $480 million per year. Current backlog, capex and balance sheet along with management's "committment to the dividend" leads me to believe the dividend is probably safe for the next two years. One thing that could change that is if Diamond decides to pick up some distressed newbuild jackups. Another possible wildcard is that Loews has been increasing their presence on Diamond's board. Could be some backroom M&A deal being forged, given DO's low valuation.

  • They're getting a lot of calls so don't expect to get right through if you call. Shea couldn't verify amount. I am guessing it will be less than the $1/share annual alluded to in their spinoff filing since they have said they want to be able both increase it and sustain it. Maybe it'll be a buck. Who knows, but it is coming. As in their presentaion, they are also considering paying down debt with cash flow as well as share buyback-which could happen at anytime if they decide to do a buyback.

  • cben15606 cben15606 Sep 7, 2014 6:06 PM Flag

    If you read their presentation from last week you will see that Paragon will probably be depreciating about $400 million per year.

  • From a CS report issued yesterday posted on SDRL investor village MB. Can't cut and paste it but rates look good-slight bump. Report cites drillers DO(multiple rigs), SDRL, Ofdjell, QGOG, PACD and ORIG as having signed rigs. The only specific rigs cited were QGOG's 5G Gold Star getting 3 years at $470KPD(up from $354KPD) and their 2G Olinda Star extended at $257 KPD(down from $294KPD). Says this is a positive for DO since QGOG's packaging older rig increases liklihood of DO doing same.

  • Reply to

    The Issue Here is Open Contract Days....

    by play_tow Sep 5, 2014 11:35 AM
    cben15606 cben15606 Sep 5, 2014 1:48 PM Flag

    No they are not losing money. 2013 net income was $172.4 million or a PE of 4 based on 2013. The jackup market has strenghtened since and last 6 months net income is $135.2 million or a current PE of 2.6. EBITDA is even more impressive. Tilley I believe said the higher taxes would cost about $7million per quarter. So PGN has plenty of money to spend; they're just not saying exactly how they will spend it.

  • Reply to

    The Issue Here is Open Contract Days....

    by play_tow Sep 5, 2014 11:35 AM
    cben15606 cben15606 Sep 5, 2014 12:35 PM Flag

    I don't believe that is why shares are currently falling. All those open days for 2015 and beyond are part and parcel for any jackup driller and has long been known for PGN. The more recent tumbling probably is related to the eff-up of their UK tax structure, even if it is temporary, along with what could be perceived as backpedaling on dividend policy.

    One should not make the mistake of comparing open days of a jackup driller to floaters which typically sign longer contracts. Addressing the open jackup days was actually the strongest part of their presentation.
    Paragon(PGN) will probably do better, and maybe a lot better than many casual observers believe. And for a host of reasons. Just a few of which are that there is no slowdown in the jackup market; many of the speculative newbuild jackups will not be delivered; one doesn't see the bifurcation in the jackup market to the extent of the floater market and to a large extent operators do not have a problem contracting older jackups from the likes of Paragon, Ensco, Shelf drilling etc so long as they are well maintained and meet contract specs. Remember too that these older rigs can significantly undrebid a speculative newbuild.

  • Reply to

    Presentation

    by balven123 Sep 2, 2014 6:48 PM
    cben15606 cben15606 Sep 5, 2014 12:16 AM Flag

    Paragon(PGN) will probably do better, and maybe a lot better than many casual observers like yourself believe. And for a host of reasons. Just a few of which are that there is no slowdown in the jackup market; many of the speculative newbuild jackups will not be delivered; one doesn't see the bifurcation in the jackup market to the extent of the floater market and to a large extent operators do not have a problem contracting older jackups from the likes of Paragon, Ensco, Shelf drilling ets so long as they are well maintained and meet contract specs. Remember too that these older rigs can significantly undrebid a speculative newbuild.

    In the long run they will have to renew their fleet but these drillers enjoy tremendous cash flows. Paragon's EV/EBITDA is less than 3.

  • from oilpro

    "The analysts predict doom and gloom for the Asia Pacific jackup market, pointing to the hundred and twenty (120) or so new build jackups under construction or on order but the devil is in the detail and close examination reveals that there are not that many truly jackups under construction that will enter the competitive market – if you leave aside the fifty speculative units to be delivered by end 2016. That being said the jackup market is currently a little soft partly due to sentiment and partly because operators have been slow in awarding for work they have tendered during the year. For the first time in this construction boom we have seen two jackups delivered that have not had a contract to go to.

    So what will be the impact or fate of the fifty (50) units that are classed as speculative for resale, which are to be delivered between now and end 2016? A whole gaggle of brokers are busy plying the ether with emails offering jackups for sale or bare-boat. If you are a speculator do you pay the 95% ($160-170 million), take delivery and risk all hoping to flip soon in a market perceived as soft or do you walk away from your $9 million and let the shipyard hold the baby? As most of the speculators are Singaporean it really is “what to do lah” time but those that know the speculators say many will walk away.

    The speculators now have to face hard facts. They have ordered too many and many of the wrong design. Drilling Contractors will be very leery of picking up a Chinese built rig and then only if it is bargain basement price and they have a contract to fulfill. The industry is well aware of the issues Prospector and Seadrill have had with rigs delivered from one of the more reputable yards in China....

  • Reply to

    PGN presentation this afternoon

    by gringo33339 Sep 3, 2014 1:30 PM
    cben15606 cben15606 Sep 3, 2014 10:40 PM Flag

    Good listing of the highlights gringo.It was not pretty. One thing I would add on the good ledger is that they made a compelling case I thought, as to why there is a reasonable chance that the jackup market will hold up better, perhaps much better, than what floaters are experiencing and older, well maintained jackups in particular. If that proves true, then these spinoff missteps will ultimately become just short term glitches.

  • Nearly 14% of outstanding shares. Investor conference next week. Should be interesting!!

  • Reply to

    offshore activity Rig

    by pismire_03 Aug 21, 2014 5:07 PM
    cben15606 cben15606 Aug 22, 2014 6:36 AM Flag

    DiscountOffshore(DO) also had a good update but with a predictable hit piece on Bear-rons. DO contracted an upgraded 40 year old rig for one year at $425KPD and a nice 7 month extension on yet another really old 2G, never upgraded, that I had figured on going to the heap.

  • Reply to

    Shelf Drilling IPO and Paragon

    by cben15606 Aug 14, 2014 11:44 PM
    cben15606 cben15606 Aug 17, 2014 12:08 AM Flag

    NP ny, Here's excerpt from wsj piece:
    Helen Thomas
    June 12, 2014 10:41 a.m. ET

    Timing is everything when it comes to initial public offerings. So Thursday's announcement by Shelf Drilling, the Dubai-based offshore contractor, of plans to debut its shares in London looks odd. Many big oil companies are cutting back on capital spending, day-rates for drilling rigs are falling and the oil services industry is feeling the squeeze.

    Shelf paid Transocean about $1 billion for 37 so-called jackup rigs to use in shallow water in November 2012. The rigs have been customized and modernized; some idle rigs have been brought back into active service. But seeking to raise about $500 million by floating perhaps 25% of the company would imply those assets have doubled in value in less than two years.

    Half of the stock sold will come from existing shareholders, while new money will also be raised to pay off expensive debt from the Transocean deal.

    And Shelf's rigs appear to be in demand. Its order backlog has more than doubled since the end of 2012. The average daily rate at which it leases out its rigs has risen 17% over the same period. That isn't yet showing up in profit: earnings before interest, tax, depreciation and amortization were roughly flat in the first quarter compared with a year before.

    The question for investors is what compensation they require for the risk that new rig supply displaces older, lower-specification ones elsewhere, which show up in Shelf's core markets. A promised dividend payout ratio of 40% to 60% should help, especially underpinned by an order book whereby 60% of Shelf's capacity is committed for 2015 already.

    Assuming a $2 billion market value, Shelf would list at a multiple of about 5.2 times 2014 Ebitda. That is well below larger, diversified drillers like Ensco on about 7 times and Rowan on closer to 9 times. But Hercules Offshore, a shallow-water driller with an older, lower-spec fleet in the Gulf of Mexico, commands just 4.5 times

  • Reply to

    When might PGN announce a dividend?/

    by jhgrsrch Aug 16, 2014 11:14 AM
    cben15606 cben15606 Aug 16, 2014 10:39 PM Flag

    Yes J, I have been building a NE position for the last six months.or so. Adding quite a few shares of PGN last couple days as I think they'll be able to sustain a rich mlp-like dividend(and without the K-1!). I expect the share price to hit the 8's at some point and will buy aggressively then too but don't want to miss low 9's just in case.

    If you're talking about potential share price of 18-20 for PGN down the road, that would not suprise me. What's interesting is that Shelf Drilling has a very comparable fleet to Paragon, really they're the only ones with something of a pure comparison. And their now pulled IPO valuation suggests, through their actions, they are confident about these rigs' future beyond just a couple years and would also support your 18-20 price target I think.

  • Reply to

    When might PGN announce a dividend?/

    by jhgrsrch Aug 16, 2014 11:14 AM
    cben15606 cben15606 Aug 16, 2014 12:35 PM Flag

    Posted on PGN board:

    From PGN's form 10, PGN intends on paying out $80-90 million/year starting in Q4. So the first dividend should be in the coming months. Of course all ultimately at the whim of the BOD but I would plan on about a $1/share(25 cents quarterly) dividend.

  • Reply to

    Dividend

    by typea1949 Aug 15, 2014 6:33 AM
    cben15606 cben15606 Aug 16, 2014 9:52 AM Flag

    Hey woody,

    From PGN's form 10, PGN intends on paying out $80-90 million/year starting in Q4. So the first dividend should be in the coming months. Of course all ultimately at the whim of the BOD but I would plan on about a $1/share(25 cents quarterly) dividend.

  • Shelf Drilling(SD) is the private drilling company formed from the purchase of RIG's jackup fleet couple years back. SD has 35 jackups it acquired from RIG and 2 under construction.

    SD was to do an IPO in Dubai two months ago(6/2014)that was cancelled but the IPO valuation can be compared to PGN due to their similar fleets i.e. older jackups. The IPO was cancelled possibly due to lack of interest but a couple articles mentioned that apparently there some kind of liquidity problem on the Dubai exchange where it was to list. At any rate SD management decided they were better off staying private, for the time being.

    SD's MarketCap post IPO was to be $2 billion along with about $500 million debt after some proceeds used to pay down debt from $700 million+, leading to an EV of about $2.5 billion. EBITDA of SD last year was $468 million or an EV/EBTDA of 5.34.

    By contrast, PGN's market cap is $800 million with an EV of $2.5 billion, EBITDA in the $850-900 million range for an EV/EBITDA of 2.8-2.9. Also, while their are strong similarities between fleets, I would say PGN has a decidedly better fleet in that PGN has 5 drillships and 2 semisubs currently drilling while SD has none. PGN also has 8 higher value NSea jackups drilling while SD has none. SD has a total of 33 active rigs while PGN has 42. Using these tidbits, I would venture to say that if/when driller sentiment improves and compared to SD's expectations for a similar fleet(per management and their bankers)we should see a dramatic improvement in share price. A double from here would not be an unrealistically optimistic possibility, I think.

  • Reply to

    Mexico pace picking up

    by cben15606 Aug 13, 2014 6:51 PM
    cben15606 cben15606 Aug 13, 2014 6:52 PM Flag

    That was from Upstream today

  • Kathrine Schmidt

    13 August 2014 17:48 GMT
    Mexican regulators on Wednesday granted Pemex the bulk of its acreage request as the nation's oil industry opens to private participation, consolidating the state-led company's status as a major force despite losing its monopoly status.
    .
    Mexico state-led oil company Pemex has identified 10 high-priority areas where it will offer partnerships to private players, including closely watched and potentially lucrative deep-water finds Trion and Exploratus in the Perdido fold-belt.

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