This article
was first published by Seeking Alpha on February 12, 2015.
By Sarfaraz
A. Khan. Research Asst. Adnan Mushtaq
Earlier this
month, Atwood Oceanics (NYSE:ATW) posted strong first quarter results. The company's
adjusted income came in at $1.72 a share, topping analysts' consensus estimate
of $1.45 a share. The drilling revenues climbed 23% year-over-year to $337
million, also ahead of markets' expectation of $336 million. EBITDA came in at
$186 million while EBITDA margins were 55%. This was also better than market's
expectations - based on February 3 report from Credit Suisse's Gregory Lewis
emailed to me.
But what
investors were looking for was a glimpse into the future outlook of the
offshore drilling industry and Atwood Oceanics management seemed honest in its
assessment when it said that it is not expecting any recovery until 2017.
2015 Will Be
Worse
In his February report emailed to me, Raymond James's analyst Marshall Adkins wrote that 2014 was the second slowest contracting year of the past decade, ahead of 2009 when operators signed just 70 rig years' worth of contracts. In 2014, operators signed 135 rig years of contracts, significantly lower than an average of 240 rig years in each year. Utilization rates declined to 84% in December 2014 from approximately 90% in December 2013 while day-rates for Ultra-deep-water rigs fell to $400,000 a day after touching $700,000 a day in ...… read full article at Seeking Alpha.
