Seeking Alpha: Oceaneering Holding Up Better Than Most

It says a lot about Oceaneering (NYSE:OII) that the most credible debates about the company concern whether it will be able to maintain its dividends and share buybacks at the levels to which investors have become accustomed in recent years. Survival is not really up for debate with this leading deepwater support company and neither is an eventual return to growth unless you believe that offshore development is going to just (somehow) stop.

None of that should be taken to mean that Oceaneering's operating environment hasn't become more treacherous, nor that there won't be a serious drop in profits. Ironically, Oceaneering may actually see free cash flow improve as it cuts back on capex in an oversupplied market. The quality of this company is very well appreciated by the Street and it seldom trades at a big discount to its peers, but I do believe the Oceaneering shares are undervalued and offer a relatively uncommon buy-and-hold opportunity within energy. Investors looking to really maximize the bang for their buck would probably do better with lower-quality companies, but those ideas carry survival risks that aren't a concern here.

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Oceaneering Holding Up Better Than Most

Seeking Alpha: Oceaneering Seems A Little Underloved

This hasn't been a fun stretch for offshore energy service companies. Land-oriented service providers like Helmerich & Payne (HP) and Halliburton (HAL) have performed nicely so far this year, but the offshore companies like Oceaneering (OII), Tidewater (TDW), and Helix (HLX) have been left behind on worries that actual activity is going to underwhelm as large energy companies pay much greater attention to costs and free cash flow generation.

I think the details matter. I would be more nervous about owning shares in companies heavily leveraged to drilling activity and those dependent upon Brazil for a large share of revenue. I also have much less interest in the offshore construction and seismic spaces as a whole. But in the case of Oceaneering, I believe the Street is overlooking what should be a profitable multiyear opportunity in drilling support and vessel support.

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Oceaneering Seems A Little Underloved

Seeking Alpha: Aging Wells And Deepwater Expansion Bodes Well For Helix Energy Solutions

Investors haven't been too fond of offshore energy service plays over the last six months, with shares of companies like Oceaneering (OII), GulfMark (GLF), Tidewater (TDW), and Technip (OTCQX:TKPPY) all in the red. Against a peer group that has declined from around 5% to 20%, Helix Energy Solutions' (HLX) roughly 5% decline doesn't seem quite as bad. More importantly, the company's backlog continues to build and the company is likely looking at many years of well intervention deepwater support work. Helix looks about as undervalued as its peer group, but the company's more aggressive newbuild program and increasing acceptance of the company's well intervention approach could lead to outperformance.

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Aging Wells And Deepwater Expansion Bodes Well For Helix Energy Solutions

Seeking Alpha: GulfMark Looking At Short-Term Worries And Long-Term Opportunities

GulfMark Offshore (GLF) has a high-quality, high-spec modern marine vessel fleet, but investors presently seem more concerned about the risks of delays in new rig deployments in the Gulf of Mexico than the opportunities offered by higher utilization and dayrates in the North Sea and GoM in the coming years. GulfMark isn't hands down a screaming bargain today, but I believe the current market conditions support a bullish outlook for profit and cash flow generation over the next couple of years.

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GulfMark Looking At Short-Term Worries And Long-Term Opportunities

Seeking Alpha: After A Rough Patch, Tidewater Looks A Lot More Interesting

Back in October Tidewater (TDW) was one of the relatively few energy service companies that looked overvalued to me. While I liked the company's strong position in offshore and deepwater supply vessels, I just didn't think that paying such a high multiple was reasonable given risks in the North Sea and Angola, not to mention potential delays in floater and jackup deliveries.

As it turns out, the shares declined more than 20% since that piece, with the stock taking a big hit on disappointing third quarter results. I don't see the results as a sign of any particular operating deficiency, though, and I believe the reset in valuation and expectations makes this a much more interesting name to consider today.

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After A Rough Patch, Tidewater Looks A Lot More Interesting

Seeking Alpha: Cal Dive Still Waiting For That Offshore Recovery

There are more than a couple of ways to make Cal Dive (DVR) look cheap. If you look the book value of the company's vessels, it might be tempting to call the stock undervalued on the basis of its liquidation value. Likewise, if you look at past utilization rates and EBITDA margins, it can be tempting to base a strong bull argument on the basis of substantial earnings leverage once Gulf of Mexico activity levels recover.

I'm not nailing down the coffin lid on Cal Dive, but I do see this stock as a more speculative play on better offshore activity levels in the Gulf. The nature of offshore support functions is changing, and I believe it favors companies like Oceaneering (OII), Chouset, Subsea 7, Saipem, and Technip (OTCQX:TKPPY) as more work goes to ROVs and deepwater projects. Projects are starting to move forward, though, and Gulf rival Tetra Technologies (TTI) has sounded relatively bullish on near-term prospects. If Cal Dive can get more of its fleet working in FY 2014 and continue to move back toward mid-teens EBITDA margins, a substantially higher share price is possible.

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Cal Dive Still Waiting For That Offshore Recovery

The Motley Fool: What Comes After “Great” for Oceaneering International?

The worst thing I can find to say about Oceaneering International (NYSE: OII  ) is that I think the company is on a beat-and-raise carousel that eventually has to end. Oceaneering has an excellent ROV fleet that is in position to take advantage of increasing deepwater drilling and production. The company also has a strong products and projects business that will extend the company's growth past the point where subsea hardware orders start to decline. The only problem is that the good times won't last forever, and I'm starting to worry that the Street is already applying peak multiples to the stock.

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What Comes After “Great” for Oceaneering International?

Seeking Alpha: Helix Offers An Interesting Risk-Reward Mix

As I've made my way through the energy services sector recently, I've noted a pretty fair number of stocks that look undervalued on the basis of improving offshore activity and expectations for a better 2014 in North America. Helix Energy Solutions (HLX) is an interesting case, though, as although the shares don't appear to be remarkably cheap today, the company's strong utilization and contract positions, coupled with the economics of the services it provides, may make this a pretty good balance of reward relative to risk.

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Helix Offers An Interesting Risk-Reward Mix

Seeking Alpha: Cal Dive Seems To Be Fighting The Tides

Offshore diving and construction specialist Cal Dive (DVR) is an interesting story. The company's low stock price (close to $2 a share) catches an investor's attention, as does the fact that the shares trade below tangible book value and that there is a sizable short interest in the shares. If Cal Dive can drive better vessel utilization and reap the margin improvements that should come with it, Cal Dive is the sort of story that could spike fairly quickly.

The problem is that I'm not sure how likely that is. Recent awards have swollen the backlog to levels not seen in years, but it remains to be seen just how much they will improve utilization and margins - with weak pricing in the market, did Cal Dive have to surrender margins to secure revenue and cash flow? I'm also concerned that the company is fighting a losing battle with technology as remotely operated vehicles (ROVs) owned by Oceaneering (OII), Helix (HLX), and Saipem (SAPMY.PK) take share away from diving, while energy companies move exploration and production activity from the shallow waters and into the deep.

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Cal Dive Seems To Be Fighting The Tides

Investopedia: Oceaneering Is A Great Business, But How Much Are You Willing To Pay?

When it comes to equipment and services in the energy space, “strong market share” is usually pretty relative. In many markets, a company is doing very well if it can get 25% or one-third of a market to themselves, which makes Oceaneering International's (NYSE:OII) nearly 60% share of the deepwater rig support market pretty significant.

What's more, this is not just a “market share at any cost” story, as the company has a pretty remarkable record of consistent operating margin and ROIC performance despite the vagaries of the deepwater energy market. The problem for investors is in figuring out what constitutes a fair multiple for all of these positives.

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Investopedia: Improving Offshore Activity Bodes Well For Tidewater

The offshore energy market is tough enough in normal times, or whatever passes for normal. Making matters even more challenging for Tidewater (NYSE:TDW) have been the uncertain fate of the company's Sonatide JV, the need to refresh the fleet, and the fractured state of the market in which many small players will cut prices to gain business. While the service and supply side of offshore energy will probably always lag drilling, in terms of investor interest, Tidewater could nevertheless be worth further investigation as offshore activity picks up.

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http://stocks.investopedia.com/stock-analysis/2012/Improving-Offshore-Activity-Bodes-Well-For-Tidewater-TDW-OII-CKH-RIG0524.aspx

Investopedia: Odyssey Leads Investors On Treasure Hunt

Sell-side analysts desperate to add a little flair to dry research reports will try to spice things up by talking about "hidden treasure," "deep dives," or "plumbing the depths". Well, there is a company that actually does all of that. Odyssey Marine Exploration (Nasdaq:OMEX) is primarily in the business of finding and salvaging wrecked ships and it may be one of the strangest companies that trades on U.S. exchanges.

What They Do
Odyssey Marine operates several simultaneous and overlapping businesses. The core of what the company does is the use of advanced underwater technologies to find, characterize and salvage shipwrecks - often ships from the Age of Sail that sank with ample amounts of gold or silver on board. That is not all that the company does, though. Odyssey Marine also assists in more conventional salvage and recovery operations, conducts deepwater mineral exploration projects, and operates a museum exhibit that highlights some of the artifacts that the company has recovered from shipwrecks.


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http://stocks.investopedia.com/stock-analysis/2011/Odyssey-Leads-Investors-On-Treasure-Hunt-OMEX-GLD-SLV-NEM-ABX-RTP-BHP0927.aspx

McDermott's New Life

For McDermott (NYSE: MDR), it is now all about energy. With the completion of the Babcock and Wilcox (NYSE: BWC) spinoff at the end of July, McDermott is now an EPCI (engineering, procurement, construction, installation) company with a laser focus on the upstream energy market. In particular, the new company focuses on offshore projects in the Middle East and Asia. If Apache (NYSE: APA), Chevron (NYSE: CVX) or OMV want to build a new offshore installation (whether a production rig, subsea field or floating production system), they hire a company like McDermott to build it. 

The First New Quarter In The Books
On the surface, this third quarter was not an auspicious beginning. Revenue dropped 28%, and operating income fell about 14%, though net income from continuing operations was actually up an encouraging 39%. Although there was weak order flow for the quarter, and the company's backlog declined on a sequential and year-over-year basis, McDermott has booked $1.2 billion in new orders for October.

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http://stocks.investopedia.com/stock-analysis/2010/McDermotts-New-Life-MDR-BWC-CVX-DVR-HLX-GLBL1110.aspx

Big OIl Looks To Prevent Another Oil Catastrophe

Give the energy industry titans a little credit - they learn slowly, but they do learn. Late Wednesday, four major international energy companies announced a joint venture aimed at developing and preparing equipment to handle future oil spills in the Gulf of Mexico (and perhaps in other offshore locations as well).

As it stands now, the agreement includes Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS), Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP). Each company will contribute $250 million to the venture, which will be called Marine Well Containment Company and established as a non-profit entity.

For the full column:
http://stocks.investopedia.com/stock-analysis/2010/Big-Oil-Looks-To-Prevent-Another-Oil-Catastophe-XOM-COP-CVX-RDS-APA-CAM-NOV0726.aspx

Of course ... by taking this step, these companies guarantee that the next major disaster will be something completely different and will leave them flat-footed.