|Bid||6.70 x 3500|
|Ask||6.71 x 5000|
|Day's Range||6.65 - 6.90|
|52 Week Range||4.10 - 8.00|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jul 26, 2018|
|Forward Dividend & Yield||0.04 (0.57%)|
|1y Target Est||6.77|
Analysts’ consensus rating for Transocean (RIG) is 2.66, which means a “hold” on a scale of 1 (“strong buy”) to 5 (“strong sell”). Their ratings for peer offshore drilling stocks (IYE) are as follows: Noble (NE): 3.2, “hold” Diamond Offshore Drilling (DO): 3.46, “hold” Rowan Companies (RDC): 2.48, “hold” Ensco (ESV): 2.59, “hold”
Ensco's (ESV) second-quarter 2018 results to gain from higher rig operations in the prospective resources. However, cash flow is a concern.
Of the 28 analysts covering Diamond Offshore Drilling (DO), only 14% recommend some form of “buy,” ~40% recommend “hold,” and 46% recommend “sell.” Diamond Offshore has the lowest percentage of “buy” recommendations among the top offshore drilling stocks (XLE). About 45% of analysts covering Rowan Companies (RDC) and Ensco (ESV) recommend “buy,” and 23% recommend “‘buy” for Noble (NE). Analysts’ 12-month target price of $15.04 for DO implies a 22.35% downside to its July 19 market price of $19.37.
Previously, we saw analysts’ recommendations and Q2 2018 earnings estimates for Ensco (ESV). In this part, we’ll look at analysts’ views on Noble (NE).
Of the 29 analysts covering Ensco (ESV), 45% recommend some form of “buy,” ~41% recommend “hold,” and 14% recommend “sell.” Their 12-month target price of $6.72 for Ensco implies a 3.38% downside to its July 19 market price of $6.95. In comparison, ~45%, 14%, and 23% of analysts covering Rowan Companies (RDC), Diamond Offshore Drilling (DO), and Noble (NE) recommend “buy,” respectively.
In Week 28 (week ending July 13, 2018), RBC Capital, BMO, Evercore, and Susquehanna revised target prices for offshore drilling companies.
Baker Hughes, a GE Company (BHGE), published its weekly US natural gas rig count report on July 13. Baker Hughes reported that US natural gas rigs rose by two to 189 on July 6–13—the highest level since June 15. The rigs have also increased by two or ~1.1% year-over-year.
Dividend yield indicates how much a company pays in dividends relative to its share price. It’s calculated as the dollar value of dividends as a percentage of the stock price. Income investors generally value high-dividend-yield stocks while growth investors have little interest in dividend stocks.
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Credit ratings can change over time as the outlook for the industry and companies changes. On July 10, Moody’s downgraded Rowan Companies’ (RDC) corporate family rating to B3 from B2. It maintained a “negative” outlook on Rowan Companies.
In the last part of this series, we saw which offshore drillers had the highest and lowest falls in their backlogs. In this article, we’ll compare offshore drillers’ backlogs versus their revenues.
Saudi Arabia is OPEC’s largest oil producer. Reuters estimates that Saudi Arabia’s crude oil production increased by 700,000 bpd (barrels per day) to 10,700,000 bpd in June—compared to the previous month. Saudi Arabia’s production is at the highest level since November 2016.
Ensco plc (ESV) will hold its second quarter 2018 earnings conference call at 9:00 a.m. CDT (10:00 a.m. EDT and 3:00 p.m. London) on Thursday, 26 July 2018. The earnings release will be issued before the New York Stock Exchange opens that morning. The conference call will be webcast live at www.enscoplc.com.
Active WTI crude oil futures were trading above their 20-day, 50-day, 100-day, and 200-day moving averages of $67.7, $68.7, $65.9, and $61.44 per barrel, respectively, on July 2. The situation reflects the strong bullishness in oil prices. These moving average levels could support WTI crude oil prices.
Among offshore drilling stocks, Ensco (ESV) is the fourth-best-performing stock YTD (year-to-date) in 2018. Ensco has a YTD return of 19.3% as of June 27. Ensco is behind Seadrill (SDRL), Noble (NE), and Transocean (RIG). They have YTD returns of 50.7%, 35.8%, and 24.5%, respectively.
Last week Transocean (RIG) said it would retire some old rigs, although the company's far from the only oilfield-services company with uncompetitive rigs. At the time, Bernstein's Colin Davies wrote that rigs that came on line before the most recent massive build cycle were obviously outdated. Continuing on that theme today, he writes that by contrast the highest-quality rigs attract "materially higher utilization within a category." Most categories see the best rigs snagging 10% to 20% higher utilization rates, with the effect most pronounced in the jackup market, where the very best rigs are over 80% utilized, "getting to a point where rig rates will begin to inflect." That's in painful contrast to the lower-specification jackups, which are mired in mid-50% utilization and "largely immune to the improving jackup trend.
Baker Hughes, a GE Company (BHGE), released its US natural gas rig count report on June 29. Baker Hughes reported that US natural gas rigs fell by one to 187 on June 22–29—the lowest level since March 2. However, the rigs increased by three or ~1.6% from a year ago. Similarly, the rigs increased 3% in the last six months. WTI oil prices increased 23% in the first half of the year, while natural gas prices decreased 1% during the same period.
Baker Hughes, a GE Company (BHGE), released its weekly US crude oil rigs report on June 29. Baker Hughes reported that US crude oil rigs fell by four to 858 on June 22–29. However, the rigs have risen by 102 or ~13.5% from a year ago.
On June 21, Jefferies raised Transocean’s (RIG) target price to $15 and maintained a “buy” rating for the stock. On June 7, HSBC raised its target price for Transocean (RIG) to $15.20 from $11.80 and maintained a “buy” rating on the stock. On June 5, Bernstein raised its target price to $12 from $11.
On June 27, the EIA (U.S. Energy Information Administration) released its weekly gasoline inventory data. The EIA reported that US gasoline inventories increased by 1.2 MMbbls (million barrels) to 241.2 MMbbls on June 15–22. The inventories also increased by 224,000 barrels or 0.1% from a year ago.
Yesterday, US crude oil surged 3.2% to close at $72.76 per barrel—the highest level since November 2014. Oil prices rose after a significant drop in US crude oil supplies. On Wednesday, the Energy Information Administration reported that crude supplies declined by 9.9 million barrels for the week ending June 22.
Stocks aren't far from all-time highs, and for a lot of people that's hard to justify,” said Dan Wantrobski, director of research at Janney Montgomery Scott. Ensco's stock jumped 8.46% Wednesday, to close the day at $7.05. The stock recorded a trading volume of 32,807,243 shares, which was above its three months average volume of 14,555,478 shares.
Higher prices don't really help offshore drillers right now. But concerns about global supplies could be a boon in coming years.