Seeking Alpha: Fixing Transocean Isn't Going To Be Easy

It's tough enough to operate in a deeply cyclical industry, but when management makes a series of strategic blunders that leaves the company in an noncompetitive position, you get the situation Transocean (NYSE:RIG) is facing today. By refusing to build rigs without contract coverage and prioritizing scale above all else, the company finds itself with a large, outdated, and difficult-to-market fleet that has sizable day-to-day maintenance costs, whether the rigs work or not. Making matters worse, the drillers seem to be looking for any twitch in oil prices as an excuse to hold off on scrapping idle rigs.

Unless there is a dramatic increase in oil prices before year-end or a sustained above-average level of scrapping, the rig market may not come back into balance for two or three years (if not longer). Transocean is probably undervalued as a going concern, and I believe the new CEO's pedigree speaks well to the likelihood of operating improvements, but the company is going to burn through a lot of liquidity, and it's likely going to be hard road for a number of years.

Follow this link for more:
Fixing Transocean Isn't Going To Be Easy

Seeking Alpha: Keppel Hoping A Different Structure Can Produce Better Results

These are challenging times for Keppel Corp (OTCPK:KPELY). As one of the largest builders of offshore drilling rigs, Keppel is looking at an increasingly tough operating environment as low oil prices have pushed down rig utilization and dayrates, stressing already highly leveraged drillers and leading to delivery delays and cancellations. With that, the company's ADRs have fallen by more than a quarter since my last update.

Keppel is looking at a pretty solid order book that will keep its yards busy for the next two years, but there are serious questions about what happens after that. Unless oil prices turns up sharply this year (and look likely to stay there), it's hard to see where the replacement orders are going to come from. That makes management's decision to acquire all of Keppel Land even more significant to the long-term story, as property development may be the company's only viable option for growth after the offshore order book dries up. While Keppel does still pay a solid dividend and appears to be undervalued by a double-digit percentage, the significant operating uncertainties make it difficult to argue for buying these shares.

Read more here:
Keppel Hoping A Different Structure Can Produce Better Results

Investopedia: Transocean Still Has Plenty To Prove, But The Valuation Isn't Demanding

It doesn't seem like it was that long ago when Transocean (NYSE:RIG) was considered one of the best-run energy-related companies and the leader in the offshore drilling industry. While Transocean still has far and away the largest offshore fleet, the company's issues with downtime, operational efficiency, and legacy Macondo liabilities has eroded a lot of the goodwill the company had built with the Street. Transocean's valuation doesn't appear very demanding today, and an improving deepwater market should help, but management still has to rebuild its credibility if the stock is to get the sort of valuation it used to enjoy.

Continue here:
http://www.investopedia.com/stock-analysis/080813/transocean-still-has-plenty-prove-valuation-isnt-demanding-rig-sdrl-esv-vtg.aspx

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.

For the full article, please follow this link:
http://www.investopedia.com/stock-analysis/071113/oceaneering-great-business-how-much-are-you-willing-pay-oii-hlx-ge-fti-rig.aspx

Investopedia: Seadrill Still In Motion, But Delivering Better Utilization And Dividends

Although I've had some issues with Seadrill's (Nasdaq:SDRL) aggressive (and highly levered) business plan, one thing really hasn't changed about this company – if you believe that various oil and gas majors are serious and committed to growing their production over the next five years, Seadrill is going to be a significant beneficiary. I sometimes wonder if Seadrill management is playing out some sort of deep-seated desire to be investment bankers with all of the elaborate deals and transactions they conduct, but the reality is that they are doing well in terms of contract coverage and dividend payments, and that counts for a lot.

Please read the full piece here:
http://www.investopedia.com/stock-analysis/052813/seadrill-still-motion-delivering-better-utilization-and-dividends-sdrl-rig-bp-xom-atw.aspx

Investopedia: Hercules Offshore Seeing Better Days In The Gulf

The energy exploration and production business in the Gulf of Mexico has finally gotten back to something closer to normal, and that's good news for Hercules Offshore (Nasdaq:HERO). While the company's relatively low-spec rigs do limit the company's earnings potential (and the multiple investors should pay), it's also true that a rising tide lifts all boats and that the company is seeing improving day rates and contract lengths. Investors should be cautious about the run-up in energy services stocks, but Hercules could yet be a name worth following.

Please continue here:
http://www.investopedia.com/stock-analysis/2013/Hercules-Offshore-Seeing-Better-Days-In-The-Gulf-HERO-RIG-APA-ESV0213.aspx

Investopedia: Can Offshore Continue To Offset Weaker Onshore Trends At National Oilwell Varco?

With multiple reports in hand, it looks like a few themes have emerged in the energy equipment space. Order growth is fine, but margins have become more problematic. Given that orders tend to drive these stocks, that works out well for investors today. Still, investors considering National Oilwell Varco (NYSE:NOV) need to consider the opportunities in offshore in the context of challenging conditions in the onshore industry.

Please continue here:
http://www.investopedia.com/stock-analysis/2013/Can-Offshore-Continue-To-Offset-Weaker-Onshore-Trends-At-National-Oilwell-Varco-NOV-GE-CAM-RIG0205.aspx

Investopedia: Can Atwood Keep The Positive News Flowing In 2013?

For all of the talk of "catalysts," it's easy to think that Wall Street has a short attention span, and that may not be far from the truth. At a minimum, the Street is quick to incorporate new information into stock prices, and stocks can languish in the absence of a constant stream of positive news. That leaves Atwood Oceanics (NYSE:ATW) in a potential predicament for 2013. While Atwood has done an impressive job of realigning its fleet towards higher-value assets, the lack of new contract opportunities could leave the stock trading on reported margins, industry pricing trends and prospects for a MLP conversion.

Please click below for more:
http://www.investopedia.com/stock-analysis/2013/Can-Atwood-Keep-The-Positive-News-Flowing-In-2013-ATW-SDRL-RIG-ESV0108.aspx

Investopedia: A Favorable Settlement Should Open The Door For Transocean To Outperform

It has been a rough few years for deepwater drilling specialist Transocean (NYSE:RIG). In addition to a recent cyclical downturn in offshore drilling, the company seemed to fall behind a bit with its fleet and started losing business because of unexpected downtime issues. Worst of all, however, was the terrible BP (NYSE:BP) Deepwater Horizon/Macondo rig accident and the substantial financial liabilities that the company incurred for its role in the accident.

Now, however, things seem to be turning around. The company has taken steps to improve its fleet and rates are back on the way up. Most importantly, at least in the near term, Transocean has reached a very favorable settlement with the Department of Justice for its Macondo liabilities, suggesting that the company is close to having this matter behind it.

Please read more here:
http://www.investopedia.com/stock-analysis/2013/A-Favorable-Settlement-Should-Open-The-Door-For-Transocean-To-Outperform-RIG-BP-ESV-SDRL0107.aspx

Investopedia: Improving Utilization And Efficiency Should Shrink Transocean's Discount

It's been a long and painful fall for Transocean (NYSE:RIG). Once seen as one of the best operators in the energy space, and deserving of a premium valuation as a result, Transocean has struggled with its involvement in high-profile accidents, unacceptable downtime leading to contract cancellations and various other operational shortcomings. While I wouldn't say that Transocean is completely in the clear again, nor back in Wall Street's good graces, the combination of improving operations and discounted valuation could make this stock an outperformer in 2013.

To continue, please click below:
http://www.investopedia.com/stock-analysis/2012/Improving-Utilization-And-Efficiency-Should-Shrink-Transoceans-Discount-RIG-SDRL-ESV-BP1107.aspx

Investopedia: Does A Shake Up At Seadrill Really Change Anything?

Ordinarily, a sudden change in management during a highly valued growth/momentum story would be expected to shake up the stock. But then Seadrill (NYSE:SDRL) has never been an ordinary story and it looks like the markets aren't too troubled by news of a new CEO and a possible corporate relocation. While I'd be inclined to agree that Wednesday's news really doesn't change a lot for the company, valuation is still pretty robust on this name.

Please read more here:
http://www.investopedia.com/stock-analysis/2012/Does-A-Shake-Up-At-Seadrill-Really-Change-Anything-SDRL-RIG-HAL-SLB1003.aspx

Investopedia: Seadrill Has What Big Oil Badly Needs

For investors who want to go full throttle into offshore energy exploration, Seadrill (NYSE:SDRL) is hard to beat. This company has quite a lot of debt and sizable spending commitments to shipyards (for new rigs), as well as a fairly complicated corporate structure. But Seadrill also has one of the best, newest fleets on the water and commitments from major oil and gas companies that should lock in favorable profits for years to come.

Please click here to continue:
http://www.investopedia.com/stock-analysis/2012/Seadrill-Has-What-Big-Oil-Badly-Needs-SDRL-RIG-DO-BP0830.aspx

Investopedia: Is Second Place Good Enough For Petrobras Investors?

The words "it's always something" seem especially appropriate for Petrobras (NYSE:PBR) and its investors. While other major oil companies like Exxon Mobil (NYSE:XOM) or BP (NYSE:BP) would love to have the huge offshore reservoirs that Petrobras has discovered in recent years, the constant interference of the Brazilian government makes it an open question as to how much benefit shareholders will ultimately reap from these assets.
Not only has the Brazilian government shown a willingness to rewrite the rules as necessary (and at the expense of shareholders), but price controls in gasoline and diesel make the already-difficult job of running a refining and marketing business even harder. If that wasn't enough, local content laws raise the specter of insufficient access to equipment, while Petrobras battles through the same difficulties in disappointing production growth and faster-declining fields as most other energy majors.

Please read more here:
http://stocks.investopedia.com/stock-analysis/2012/Is-Second-Place-Good-Enough-For-Petrobras-Investors-PBR-XOM-BP-RIG0531.aspx

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.

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

Investopedia: Will Seadrill's Aggressiveness Pay Off?

There are a lot of energy industry veterans who believe that only the conservative survive, and it's not hard to see where they're coming from - companies that have levered up and expanded aggressively during booms have often been the ones to go bankrupt during the inevitable busts. Seadrill (NYSE:SDRL) is hoping to blaze a new trail, though, and the company's large new fleet should reap the best of what this upsurge in offshore drilling activity has to offer.

Click this link for more:
http://stocks.investopedia.com/stock-analysis/2012/Will-Seadrills-Aggressiveness-Pay-Off-SDRL-RIG-ESV-DO0516.aspx

Seeking Alpha:Can Transocean Send Its Problems To The Bottom Of The Sea?

Once considered the best offshore drilling company, if not one of the best energy-related companies overall, Transocean (RIG) has had quite the run of trouble over the last two years. Not only is Transocean still involved in the Macondo disaster mess with BP, but the company has had some very un-Transocean-like operating issues including significant unscheduled downtime.

Recent results suggest that these problems are largely behind the company. What's more, dayrates seem to be getting pretty healthy again. Though Transocean shares are already well off their late 2011/early 2012 bottom, growing EBITDA and improving investor sentiment could lift these shares higher still.

Read more here:
Can Transocean Send Its Problems To The Bottom Of The Sea?

Land, Sea, Oil Or Gas - National Oilwell Varco Wins

How significant is National Oilwell Varco (NYSE:NOV) in the world of rig equipment? You can look at the company's over 60% market share for rig equipment, the fact that roughly 90% of rigs have some NOV equipment on them or you can just look at the company's nickname - "No Other Vendor." This makes NOV something of an all-comers pick for energy investors. Worried about whether you should invest in oil or gas? NOV's equipment serves both markets, and likewise for onshore and offshore - though offshore looks like the best growth opportunity for the company right now.

Rinse and Repeat
NOV has a habit of not only generating respectable cash flows, but also using it to build the business, as the rough $6.2 billion in goodwill on the balance sheet might indicate. It has been good about its M&A, though, using it to build share and drive efficiencies in the acquired businesses.

Click here for more:
http://stocks.investopedia.com/stock-analysis/2012/Land-Sea-Oil-Or-Gas--National-Oilwell-Varco-Wins-NOV-PBR-RIG-WFT0412.aspx

Investopedia: What Is DryShips Worth With Suffering Shipping Business

Every so often, investors will find valuation anomalies in the market. DryShips (Nasdaq:DRYS) looks like a good example today, as the company's stake in Ocean Rig (Nadsaq:ORIG) is actually worth more than the company's present market capitalization. Although the shipping industry is indeed struggling, and no fast turnaround looks likely, any estimation above zero means the core DryShips operations are undervalued.

A Tough Quarter, As Expected  
Nobody expected a great quarter from DryShips, or at least not insofar as the drybulk and tanker operations were concerned. Net voyage revenue for shipping was down 23%, as the company saw a 4% decline in voyage days and a 20% decline in contract rates. By comparison, the majority-owned Ocean Rig drilling subsidiary saw revenue more than double for the quarter.

Please read more here:
http://stocks.investopedia.com/stock-analysis/2012/What-Is-DryShips-Worth-With-Suffering-Shipping-Business-DRYS-ORIG-DO-RIG-PBR0228.aspx#axzz1mCOsX1dQ

Investopedia: 2011 In Review - Energy Services Come Up Short

There's arguably no such thing as a dull year in energy. In 2011, oil prices broke out over $110 in the late spring, only to ultimately bottom out below $75 in mid-fall before recovering back in the $90s. Although natural gas prices did break above $5 early in the year, most of the year has seen a steady erosion in prices and is close to flirting with the $3 mark.

With the market apparently flooded with natural gas, it is perhaps no great surprise that energy service companies have not been so strong in 2011. Although overall activity has not dropped as much as in prior "bad years," Wall Street has nevertheless seen fit to move these stocks down by about 10% on a sector-wide average.

Please read more here:
http://stocks.investopedia.com/stock-analysis/2011/2011-In-Review-Energy-Services-Come-Up-Short-HOS-CLB-SLB-HAL-CAM-NOV-RIG1228.aspx

Investopedia: Seadrill - The Driller For Mad Dogs And Englishmen

Investors in stocks like Transocean (NYSE:RIG) or Diamond Offshore (NYSE:DO) might not be feeling the love yet, but the offshore drilling market is actually starting to get better. With a very modern fleet, aggressive leverage and a healthy dollop of devil-may-care operating philosophy, Seadrill (NYSE:SDRL) is ready for that turn. The question for investors, though, is whether they can handle the risk and valuation that comes with arguably the most aggressive player in a highly cyclical sector.

A Ho-Hum Third Quarter  
The markets are still expecting the offshore drilling market to be more of a 2012 event, so Seadrill's third quarter earnings are not likely to be examined quite so closely. Revenue was okay, falling 4% from last year and rising 3% from the second quarter. Rates were not all that incredible this quarter, but utilization was quite good and the company is bringing more of its rigs under contract.

Click this link for the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Seadrill--The-Driller-For-Mad-Dogs-And-Englishmen--SDRL-RIG-DO-HERO-PKD-PBR-ESV-FRO1130.aspx