5.97 -0.06 (-1.04%)
After hours: 4:11PM EDT
|Bid||5.96 x 29200|
|Ask||6.04 x 47300|
|Day's Range||5.82 - 6.05|
|52 Week Range||4.10 - 7.60|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||0.04 (0.68%)|
|1y Target Est||N/A|
July WTI crude oil futures were trading above their 100-day and 200-day moving averages of $65.46 per barrel and $60.36 per barrel, respectively, on June 18. These levels could be key support levels for WTI oil prices.
Baker Hughes, a GE Company (BHGE), released its weekly US natural gas rig count report on June 15. Baker Hughes reported that the US natural gas rig count fell by four to 194 on June 8–15—the lowest level since April 13. However, the rigs increased by eight or ~4.3% from a year ago.
In this part, we’ll see how analysts revised their target prices and recommendations for offshore drilling stocks in week 23—the week ending June 8.
On May 24, Wells Fargo raised Transocean’s (RIG) target price to $13 from $11. Earlier in the month, Bank of America Merrill raised Transocean’s target price to $15 from $14. Susquehanna raised the target price to $11 from $10. RBC raised Transocean’s target price to $15 from $13. In May, Jefferies maintained a “buy” rating on Transocean and raised the target price to $14 from $12.
Seadrill Partners’ (SDLP) vessel and rig-operating expenses dropped 18.7% to $76.4 million in the first quarter compared to $94 million in the previous quarter. In the chart above, we can see that Seadrill Partners’ expense-to-revenue ratio rose to 39% in the first quarter compared to 35% in the previous quarter and 23% in the first quarter of 2017. Seadrill Partners’ G&A (general and administrative) expenses fell to $10.9 million in the first quarter compared to $11.6 million in the previous quarter.
The operating cash flow represents the cash flow from a company’s core operations. In the first quarter, Transocean’s (RIG) cash flow from operations dropped to $103 million from $244 million in the previous quarter. Transocean’s capex stood at $53 million in the first quarter.
Seadrill Partners’ (SDLP) backlog was $1.3 billion on May 24. It fell from $1.5 billion in February. A company’s backlog helps investors to gauge what its revenue might be in the future.
Transocean (RIG) expects its second-quarter revenues to increase 14% from the first quarter. In the first quarter, Transocean’s (RIG) drilling revenues were $664 million—5.5% higher than its revenues of $629 million in the previous quarter and 11.2% lower than its revenues of $748 million in the first quarter of 2017. Transocean acquired these floaters from Songa on January 30.
As of May 30, Transocean (RIG) stock had a good run in the last three months. The stock rose more than 37% during this period. Currently, Transocean is trading 11.2% lower than its 52-week high and 74.5% higher than its 52-week low. The Dow Jones Industrial Average (DIA) has fallen 1.4% in last three months as of May 30. The SPDR S&P 500 ETF (SPY) has risen 0.35% during the same period.
In the first quarter, Seadrill Partners’ (SDLP) operating revenue fell to $194.3 million from $256.2 million in the previous quarter, a sequential fall of 24%. Seadrill Partners earns its revenue by operating semisubmersibles, drill ships, tender rigs, and barges. The decrease in Seadrill’s first-quarter revenue was the result of a full quarter of idle time for West Polaris, West Vencedor‘s becoming idle during the quarter, and idle time on West Auriga related to planned maintenance.
Seadrill Partners (SDLP) released its results for the first quarter of 2018 on May 25. Its stock hasn’t had a good run YTD (year-to-date), falling more than 11% during the period.
After a fantastic run for Seadrill (SDRL) in week 20, the stock fell in the following week. In week 20, Seadrill reached a 52-week high of $0.73. The stock rose more than 98% in week 20. This situation turned around in week 21 (week ending May 25) and the stock fell more than 32%. We already mentioned in our previous article that the stock rise was not based on fundamentals. Also, Seadrill’s technicals suggested the stock was overbought and overvalued. Thus, a fall in Seadrill’s price was expected.
The US offshore rig count in Week 21, which ended May 25, was 19, unchanged from the previous week and four rigs lower year-over-year. In the last three weeks, the offshore rig count has risen. The total US rig count (oil and natural gas rigs) was 1,059 in Week 21, up 13 rigs from the previous week, and significantly higher than the 908 rigs reported in the same period last year. The total US oil rig count was 859, 15 rigs up from the previous week. In April, the average US rig count (land and offshore) was 1,011, up by 22 rigs from 989 in the previous month and by 20 rigs YoY (year-over-year). The average US offshore rig count was 16, up by three rigs from 13 rigs in the previous month and down by four rigs YoY.
Analysts’ rating for Noble (NE) is 3.2, which means “hold.” Their ratings for other offshore drilling stocks (IYE), on a scale of 1 (strong buy) to 5 (strong buy), are as follows: Transocean (RIG): 2.7, or “hold” Ensco (ESV): 2.7, or “hold” Rowan Companies (RDC): 2.6, or “hold” Diamond Offshore (DO): 3.5, or “hold”
Analysts’ consensus rating for Transocean (RIG) is 2.7, which means “hold.” Peers Rowan Companies (RDC), Diamond Offshore (DO), Noble (NE), and Ensco (ESV) also have “hold” ratings.
Analysts’ consensus rating for Diamond Offshore is 3.5, which means a “hold.” Their ratings for other offshore drillers (XLE) on a scale of 1 (strong buy) to 5 (strong buy) are as follows: Ensco (ESV): 2.7, which means “hold” Transocean (RIG): 2.7, which means “hold” Rowan Companies (RDC): 2.6, which means “hold” Noble (NE): 3.2, which means “hold”
In this series, we’ll discuss analysts’ ratings and recommendations for offshore drillers, starting with Ensco (ESV). Of the 31 analysts covering Ensco, 45% recommend “buy” or some equivalent, 39% recommend “hold,” and 16% recommend “sell.” Among the top offshore drilling stocks (IYE), Ensco has the highest percentage of “buy” recommendations.
Baker Hughes, a GE company (BHGE), released its US crude oil rig count report on May 25, indicating that the US crude oil rig count rose by 15 to reach 859 between May 11 and 18—the highest level since March 13. The rig count was 137 (~19%) higher than a year ago. WTI crude oil prices have increased ~60% since June 21, 2017, while the iShares US Oil Equipment & Services ETF (IEZ) and the VanEck Vectors Oil Services ETF (OIH) have risen ~17.8% and ~15%, respectively.
Energy stocks have continued to outperform as oil prices rise. Discover three ETFs that provide exposure to the equipment and services subsector.
may not have the best fundamentals and balance sheet, but the chart has improved significantly in recent months. In this daily bar chart of ESV, below, we can see that prices rallied back up to their January highs. The daily On-Balance-Volume (OBV) light moved up from September to January and corrected until late March when another rising trend started.
Seadrill (SDRL) had a fantastic run in the last four days. Read Why Seadrill Stock Skyrocketed? to learn more about why the stock price rose and if any fundamentals are attached to the rise. In this part, we’ll discuss the technical indicators for Seadrill and some other key offshore drillers (IYE).
In week 19, which ended on May 11, several analysts revised their recommendations and target prices for offshore drilling stocks.