So far this earnings season, we've heard from offshore
drillers
Ensco (NYSE: ESV), which is
down but not out, and
Noble Corp. (NYSE: NE), which is
ready for anything. My Foolish colleague David Lee Smith
covered the results of
Diamond Offshore (NYSE: DO), a deepwater
stock he said
you shouldn't miss.
Those three drillers make my Deepwater Dean's List. Their
drilling margins lead peers by a wide margin. Routinely
falling short on this measure is
Pride International (NYSE: PDE), which
reported quarterly results yesterday. Let's see what the
B-lister had to say for itself this time around.
Pride's transformation toward a purer deepwater focus is
going swimmingly, thanks to the successful
spinoffof
Seahawk Drilling (Nasdaq: HAWK). More than
75% of the company's quarterly
EBITDA(excluding
corporate and other items) came from the company's deepwater
and midwater segments. Both registered substantial sequential
declines, however, on account of much lower utilization
rates.
The deepwater segment saw the Pride North America hit the
shipyard for a planned maintenance and upgrade program in the
middle of its multiyear stint for
BP in Egypt. The Pride South Pacific likewise
took a breather before beginning its
cut-rate contractwith
Noble Energy (NYSE: NBL) in West Africa. The
Pride Carlos Walter, working for
Petrobras in Brazil, also experienced some
unexpected repair downtime.
We already know that the midwater market is struggling,
based on our review of
Transocean 's (NYSE: RIG) last
fleet status update. Pride's now got two of its six
midwater floaters uncontracted, with no expectation of
sending them back into action before mid-2010.
The fourth quarter promises more of the same, at least in
terms of planned mobilization and shipyard downtime. The
company expects this to represent a trough quarter, with
better times in store for 2010 and beyond.
This pattern has been going on
for years now: heavy shipyard time, low utilization,
brighter days ahead. I prefer drillers that have been
performing at a high level for years on end, but maybe that's
just a funny quirk of mine.
Motley Fool CAPS
players are plenty excited about Pride's prospects,
rating the company a tippy-top five stars. What's
your take?
This article was originally published as
Another Subpar Performance by Prideon
Fool.com
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