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
Showing posts with label Technip. Show all posts
Showing posts with label Technip. Show all posts
Monday, April 14, 2014
Thursday, March 6, 2014
Seeking Alpha: The Beginning Of The End, Or The End Of The Beginning For Technip?
Investors have turned on cautious on capex-sensitive energy service and engineering companies, and that has sent the shares of Technip (OTCQX:TKPPY)
down more than 10% over the past year. The concerns are not without
some basis, as several major projects were delayed in 2013 and major oil
and gas companies have issued modest capex growth guidance.
That Technip is in good company with offshore rivals like Saipem (OTCPK:SAPMY) and Subsea 7 (OTCPK:SUBCY), as well as onshore oil & gas engineering companies like McDermott (MDR), is cold comfort. Although Technip has established a reputation as a superior project and risk manager, weak guidance in late 2013 rattled investor confidence and the shares are trading as if oil and gas capital spending growth will be quite modest from here. It is likely true that capex growth will be lower than the bulls expect, but it looks like the bears have taken things a bit far with Technip.
Read the full article here:
The Beginning Of The End, Or The End Of The Beginning For Technip?
That Technip is in good company with offshore rivals like Saipem (OTCPK:SAPMY) and Subsea 7 (OTCPK:SUBCY), as well as onshore oil & gas engineering companies like McDermott (MDR), is cold comfort. Although Technip has established a reputation as a superior project and risk manager, weak guidance in late 2013 rattled investor confidence and the shares are trading as if oil and gas capital spending growth will be quite modest from here. It is likely true that capex growth will be lower than the bulls expect, but it looks like the bears have taken things a bit far with Technip.
Read the full article here:
The Beginning Of The End, Or The End Of The Beginning For Technip?
Thursday, October 17, 2013
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.
Follow this link for the full article:
Cal Dive Seems To Be Fighting The Tides
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.
Follow this link for the full article:
Cal Dive Seems To Be Fighting The Tides
Wednesday, May 4, 2011
Investopedia: Anadarko's Balance Paying Off
In the energy sector, investors never want the same thing for long. Oil is hot until it isn't again; foreign reserves are a great growth opportunity until local governments want to revisit the deals; and offshore is the last great opportunity to build reserves until somebody screws it up for everybody. For investors who don't want to try to play that game, Anadarko (NYSE: APC) is a good balanced play with solid exposure to emerging shales, oil-rich offshore deposits, and high-potential overseas reserves.
Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see Oil And Gas Industry Primer.)
On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like Halliburton (NYSE:HAL), Schulmberger (NYSE:SLB) and Transocean (NYSE:RIG) are all looking to make their own growth targets on those markets.
To read the full article at Investopedia, click the link:
ttp://stocks.investopedia.
Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see Oil And Gas Industry Primer.)
On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like Halliburton (NYSE:HAL), Schulmberger (NYSE:SLB) and Transocean (NYSE:RIG) are all looking to make their own growth targets on those markets.
To read the full article at Investopedia, click the link:
ttp://stocks.investopedia.
Wednesday, December 15, 2010
GE Adds Another Piece To Its Subsea Business
General Electric (NYSE:GE) had to work a bit on this one, but the American conglomerate was finally able to close a deal to acquire Wellstream, a British manufacturer of flexible pipeline products used in subsea energy development projects. With this deal, GE further rounds out its energy services product portfolio, and positions itself in what is likely to be a major offshore market for many years to come.
The Terms of the Deal
GE announced that it reached an agreement to acquire Wellstream for $1.3 billion in cash. The deal was based on a price of 780 pence for each share of Wellstream, and Wellstream's stock has moved up about 5% to 786.50 in trading. This is not a case, though, of rampant expectation of a rival bid - part of GE's deal for Wellstream also included a special six pence special dividend above and beyond the bid price. All in all, going back to late September and the time before the company publicly talked about receiving expressions of interest in a buyout, the stock is up about 29%.
Valuing this deal is a little tricky, as Wellstream's 2010 looks to be a down year in a more generally upward trend. On a normalized basis, it looks like GE is paying about 14-times Wellstream's EBITDA - double the current valuation of rival Technip (on a similarly normalized basis), and a pretty healthy multiple relative to U.S. subsea equipment companies like Cameron (NYSE:CAM), National Oilwell Varco (NYSE:NOV) and FMC Technologies (NYSE:FTI).
Please click below for the full piece:
http://stocks.investopedia.
The Terms of the Deal
GE announced that it reached an agreement to acquire Wellstream for $1.3 billion in cash. The deal was based on a price of 780 pence for each share of Wellstream, and Wellstream's stock has moved up about 5% to 786.50 in trading. This is not a case, though, of rampant expectation of a rival bid - part of GE's deal for Wellstream also included a special six pence special dividend above and beyond the bid price. All in all, going back to late September and the time before the company publicly talked about receiving expressions of interest in a buyout, the stock is up about 29%.
Valuing this deal is a little tricky, as Wellstream's 2010 looks to be a down year in a more generally upward trend. On a normalized basis, it looks like GE is paying about 14-times Wellstream's EBITDA - double the current valuation of rival Technip (on a similarly normalized basis), and a pretty healthy multiple relative to U.S. subsea equipment companies like Cameron (NYSE:CAM), National Oilwell Varco (NYSE:NOV) and FMC Technologies (NYSE:FTI).
Please click below for the full piece:
http://stocks.investopedia.
Wednesday, November 10, 2010
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.
Please follow the link to the full article:
http://stocks.investopedia.
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.
Please follow the link to the full article:
http://stocks.investopedia.
Friday, September 17, 2010
Another Big Gulf Clean-Up Operation
It looks like the U.S. government is getting serious about cleaning up the Gulf of Mexico. In the wake of the BP (NYSE: BP) Macondo oil spill, the U.S. government has issued an order that will require energy companies to permanently decommission idle wells in the Gulf. Under the order, wells and platforms that have been idle for five or more years will have to be plugged and dismantled, and it would appear to include roughly 3,500 wells and 650 production platforms.
To a large extent, this move makes sense. The temporary plugs that are installed in idle wells do not last forever and can leak. Likewise, a platform can be vulnerable to severe events, like a hurricane. While severe damage is relatively rare (these platforms are built to withstand bad weather), it is nevertheless possible that a bad storm could wreck a platform and create both an oil spill risk and a hazard to navigation.
Major Gulf operators like Chevron (NYSE:CVX), ExxonMobil (NYSE:XOM), BP and Apache (NYSE:APA) could all be on the hook, as well as numerous tiny operators. Although it is not uncommon for operators to use temporary plugs for marginal wells (particularly when prices are low), this order would require permanent plugs that would not be removable later. Then again, given the high prices of the past five years, if a well has been idle for all of that time, it is not too likely that it would be coming back into significant production. (For related reading, see A Primer On Offshore Drilling.)
Click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Another-Big-Gulf-Clean-Up-Operation-APA-CVX-TTI-SPN-DVR0917.aspx
To a large extent, this move makes sense. The temporary plugs that are installed in idle wells do not last forever and can leak. Likewise, a platform can be vulnerable to severe events, like a hurricane. While severe damage is relatively rare (these platforms are built to withstand bad weather), it is nevertheless possible that a bad storm could wreck a platform and create both an oil spill risk and a hazard to navigation.
Major Gulf operators like Chevron (NYSE:CVX), ExxonMobil (NYSE:XOM), BP and Apache (NYSE:APA) could all be on the hook, as well as numerous tiny operators. Although it is not uncommon for operators to use temporary plugs for marginal wells (particularly when prices are low), this order would require permanent plugs that would not be removable later. Then again, given the high prices of the past five years, if a well has been idle for all of that time, it is not too likely that it would be coming back into significant production. (For related reading, see A Primer On Offshore Drilling.)
Click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Another-Big-Gulf-Clean-Up-Operation-APA-CVX-TTI-SPN-DVR0917.aspx
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