With this latest Q3 release, now this company's cash levels of $151 million are more than its market cap of $125 million and 76% of its enterprise value(debt adjusted). After adjusting to make sure the Current ratio remains 1.0(Current assets/current liabilities) it has an adjusted cash level/EV of 67% which makes it far greater than all other drillers, including more than double that of debt free RIGP which just started a share buy back program. Most of well known drillers like RIG, ATW, NE, ESV, RDC etc average just 8% adjusted cash/EV level. This is a long winded way of saying that the risk of bankruptcy is very low.
SDLP stock performance vs SDRL is highly variable depending on the time frame your looking at. Some time frames it under or over performs. If oil continues to rally over the coming months, SDRL will outperform on the way up as it has fallen more than SDLP over 6 month/1 year time frame.
FYI--SDLP and SDRL have the lowest available cash vs mkt cap and Enterprise value of the drillers. Both of their current ratio's are well bellow 1 and thus are in the worst liquidity position of most of the drillers. If you want a driller with a really secure dividend, look at RIGP. It has no debt and has the highest cash levels vs mkt cap and enterprise value.
I did an analysis of ORIG cash levels to mkt cap and enterprise values and here is what I found.
Comparing its $833 million in cash to its enterprise value(ie debt adjusted) of $4.7 billion yields 18% which is better than the low debt mainstream drillers like ESV, ATW, DO, NE. Since many drillers need some of that cash just to maintain a current ratio(current assets/current liabilities) of 1.0, the net adjusted amount shows that ORIG has a 21% cash/EV levels with an adjusted current ratio of 1.0. Compare this with ESV, ATW, NE at 14%, 7% and 2% respectively. Some investors compare ORIG and PACD as being in a similar situation and their stocks track each other very closely in greatly underperforming the other drillers. PACD by comparison only has a 4% adjusted cash/EV level. Thus ORIG is in better liquidity position than many other drillers. The top drillers as far as adjusted cash/EV levels were AWLCF and debt free RIGP.
Time to buy?
I did a cash/mkt cap and cash/enterprise value comparison between this company and all the other off shore drillers and here is what I found.
Awilco has the highest cash levels to enterprise value(ie debt adjusted) at 33% of any driller. The next couple runner ups are debt free RIGP and its debt laden parent RIG at 24% and 25% respectively. However many companies need their cash just to maintain a current ratio of 1.0(current assets/current liabilities) so when you adjust that so the current ratio is an even 1.0, Awilco is the king at 36% and debt free RIGP at 32%. This means that Awilco has the highest level of cash relative to its long term and short term debt of any driller.
With todays big rally in oil, perhaps this is a time to buy?
RIGP is not being bought hand over fist because of negative sentiment towards the entire oil sector and thus its particular fundamental positive issues are being ignored. There is an enormous amount of fear in this sector right now.
As of the latest report, a short position of 76,000 shares on more than 8 million of float IS INSIGNIFICANT! This represents less than 1% of the float. Stocks with more than 10% of their float sold short is just starting to be considered significant. If you don't believe me call your broker and ask. They will tell you the same.