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Deepwater oil driller Transocean
Yet it has weathered the storm pretty well. First, during its last earnings conference call, management pointed out that all the blow-out preventers (BOPs -- a contributor to the Macondo well disaster) had been recertified on its ultra-deepwater rigs and that activity was picking up in the Gulf of Mexico.
Second, it is seeing increased utilization rates for its ultra-deepwater rigs, as shown in the table below.
Rig Type |
Utilization / Avg. Daily Revenue, Sept. 30, 2010 |
Utilization / Avg. Daily Revenue, Dec. 31, 2010 |
Utilization / Avg. Daily Revenue, March 31, 2011 |
Utilization / Avg. Daily Revenue, June 30, 2011 |
---|---|---|---|---|
Ultra-deepwater |
77% / $422,800 |
76% / $435,900 |
77% / $467,700 |
80% / $516,600 |
Harsh environment |
93% / $414,100 |
92% / $366,800 |
83% / $402,400 |
93% / $430,100 |
Midwater |
73% / $328,400 |
68% / $298,500 |
60% / $313,000 |
54% / $333,000 |
High-specification jackups |
61% / $138,100 |
38% / $162,600 |
40% / $106,200 |
56% / $110,300 |
Standard jackups |
52% / $113,200 |
46% / $110,600 |
43% / $109,200 |
43% / $111,700 |
Total fleet |
64% / $271,200 |
58% / $276,600 |
55% / $292,600 |
55% / $312,100 |
Source: Company 10-K and 10-Q filings for the 3-month periods ending on given dates.
As you can see, not all rig classes have improving utilization rates, such as the standard jackups, but management said in the call that the demand is picking up for these as well, leading to comments about reactivating some of the idled units.
More importantly, however, the average daily revenue for the various rig types and for the fleet as a whole is improving. With increased demand around the globe, that trend should continue.
Finally, demand for drilling rigs is also increasing, thanks to Petrobras'
One last point in favor of Transocean: It has introduced a quarterly dividend that the board of directors believes is sustainable going forward. As of last night's price, the yield was 5.7%.
The risks with this company remain, particularly the one for financial liability from the oil spill last year. That, however, will take several years to work out. The price today is less than it was when I first purchased shares for the MUE port and the company's situation has arguably improved. Tomorrow, I'll increase the portfolio's position in Transocean.
After you add Transocean to My Watchlist, come discuss the decision on my Messed-Up Expectations discussion board, or follow me on Twitter.
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