Because the September quarter marks the end of Atwood Oceanics'
Revenue clocked in 46% higher for the year, thanks to greater dayrates across the entire fleet. Contract drilling costs spiraled up 29%, in no small part because of a rig that was out of commission for much of 2006. Shareholders might wish this rig, the Seahawk, had never come back into service -- it lost money in 2007, and management forecasts another slight loss in 2008. Overall, though, the international offshore drilling market was strong enough to lift earnings per share by nearly 60%.
While they've steadily risen over the last several years, Atwood's contract drilling margins remain unimpressive. Even excluding Seahawk, which I see no reason to do, the firm only managed a 57% drilling margin for 2007. While that's about on par with pre-merger Transocean
I also find it hard to get excited about Atwood's fleet. The firm's big-swinging drills are three 5,000-foot semisubmersibles, constructed in the early 1980s. That water depth won't cut it in the world's ultra-deep basins, whose strong prospects have led rivals like Transocean and Noble Corp
A glance at Motley Fool CAPS tells me that hundreds of you disagree with me. This may partly be due to the 67% five-year annual growth forecast listed on Yahoo!
Finally, if you're simply dying to get a piece of this business -- and it is a great, albeit pricey, business -- maybe you'll consider the following backdoor purchase. Helmerich & Payne