Yesterday, my colleague Travis Hoium had a look at contract driller Noble's
As Travis noted, Ensco's results were not hit nearly as hard on a year-over-year basis as those of Noble. A major difference here is that Ensco added a new deepwater rig to its fleet, as well as a high-end jackup purchased from Diamond Offshore
Importantly, the ENSCO 8500 and 8501, the two deepwater semisubmersibles working for clients in the Gulf, continued to operate during the moratorium, albeit at a mutually agreed reduced rate for a short period of time. Deepwater utilization was only hit by a rig moving off location in Australia and a dispute with Nexen
As for the Nexen dust-up, this concerns the ENSCO 8502, which was set to begin its contract in the Gulf of Mexico in August. Nexen took the position that it wasn't obligated to accept the rig, given the moratorium in place, and refused to accept the rig. This continues today, even with the moratorium lifted. I think Ensco will manage to negotiate some sort of settlement for the equivalent of "back rent" owed, but it's not guaranteed. At more than $480,000 per day, the delay is costing Ensco a pretty penny, and the company could miss out on a big chunk of revenue if this dispute doesn't break in its favor.
Looking ahead, Ensco didn't have too much insight to offer with regards to the Gulf of Mexico deepwater permitting situation. When asked about this on the conference call, management directed analysts to operators, as they're the ones on the front lines. That means we need to pay close attention to forthcoming conference calls by the likes of Anadarko Petroleum
As for Ensco, the company is relatively well protected from a near-term sag in activity, given the pristine balance sheet. With the share price steadily rising over the past few months, I'd say that investors are looking past the current difficulties to brighter years ahead. They're right to do so.
Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Fool owns shares of Ensco and Noble. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.