The overall market, as measured by the S&P 500 index, continued showing the strength that it has possessed for the past several weeks. However, virtually all of the gains in the index this week came on Friday. On Monday, the market was relatively flat. Tuesday saw some gains although Wednesday reversed them. Wednesday's decline continued through to Thursday which, by midday, had erased all of the gains from earlier in the week and then some. From there, the market saw a soft rally but that was also erased. Friday opened significantly above Thursday's close and continued rising from there. Crude oil also saw considerable strength but it was not without much volatility. For example, a correction followed by a very sharp rally both occurred in the crude oil markets on Tuesday. Wednesday bore witness to the highest oil prices of the week. There was also a very steep and rapid correction and rally on Friday. Friday's levels were considerably above the levels where crude oil opened the week, however. As usual, this overall market noise had different effects on the seven offshore drilling companies that are followed in this weekly series.
Seadrill (SDRL) opened on Monday, January 28 at $39.15. The stock closed at $39.60 in after hours trading on Friday, February 1. Seadrill shareholders thus saw the value of their holdings increase by $0.45 per share or 1.15% over the past week. Seadrill opened at $37.51 on January 7, 2012. This gives the stock a trailing four-week gain of $2.09 per share or 5.57%. On Friday, Seadrill announced that it has ordered two new jack-up rigs which will be delivered in 2015. The company's order is a direct response to the strength that Seadrill expects will be present in the market in 2015. As the market is already quite strong, this should give some indication of how long this market strength will persist. Seadrill also expects at least 100 rig days of downtime in the fourth quarter due to maintenance on the blow-out preventers on several of its ultra-deepwater rigs. This will be a drag on earnings during that quarter.
SDRL 5-Day Chart
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Source: Fidelity Investments
SDRL 4-Week Chart
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Source: Fidelity Investments
Ensco (ESV) opened at $62.30 on Monday, January 28. The stock closed at $64.26 in after hours trading on Friday, February 1. Shareholders thus saw the value of their holdings increase by $1.96 per share or 3.15% over the past week. The stock opened at $62.18 on January 7. Stockholders in the company thus saw their holdings increase by $2.08 per share or 3.35% over the trailing four-week period. On Friday, stock ratings site TheStreet.com reiterated its BUY rating on Ensco stock. TheStreet cited Ensco's revenue growth, high profit margin, and low debt as reasons for the stock to outperform going forward.
ESV 5-Day Chart
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Source: Fidelity Investments
ESV 4-Week Chart
(click to enlarge)
Source: Fidelity Investments
Transocean (RIG) opened at $58.07 on Monday, January 28. The stock closed at $57.85 in after hours trading on Friday, February 1. Transocean's shareholders thus saw the value of their holdings decrease by $0.22 or 0.38% this week. The stock opened at $51.92 on January 7, 2013. This gives Transocean stock a trailing four-week gain of $5.93 or 11.42% over the trailing four-week period.
RIG 5-Day Chart
(click to enlarge)
Source: Fidelity Investments
RIG 4-Week Chart
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Source: Fidelity Investments
Diamond Offshore (DO) opened at $74.97 on Monday, January 28. The stock closed at $76.21 in after hours trading on Friday, February 1. Shareholders of Diamond Offshore thus saw the value of their holdings increase by $1.24 per share or 1.65% over the week. The stock opened at $71.65 on Monday, January 7. The stock thus had a trailing four-week gain of $4.56 per share or 6.36%.
DO 5-Day Chart
(click to enlarge)
Source: Fidelity Investments
DO 4-Week Chart
(click to enlarge)
Source: Fidelity Investments
Atwood Oceanics (ATW) opened at $53.39 on Monday, January 28. The stock closed at $53.66 in after hours trading on Friday, February 1. This gives the stock a gain of $0.27 per share or 0.51% for the week. Atwood opened at $48.13 on January 7, 2013. Thus, shareholders in the company saw the value of their holdings increase by $5.53 per share or 11.49% over the trailing four-week period. Atwood Oceanics announced its fourth quarter and full year 2012 earnings results on Wednesday. The company beat on both top line and bottom line estimates, continuing to show the overall strength of the entire offshore drilling industry.
ATW 5-Day Chart
(click to enlarge)
Source: Fidelity Investments
ATW 4-Week Chart
(click to enlarge)
Source: Fidelity Investments
Noble Corp (NE) opened the week at $38.41 on January 28, 2013. The stock closed at $41.33 in after hours trading on Friday, February 1. Thus, shareholders saw the value of their holdings increase by $2.92 per share or 7.60% for the week. Noble opened at $37.08 on January 7, 2013. Thus, the stock had a trailing four week gain of $4.25 or 11.46%.
NE 5-Day Chart
(click to enlarge)
Source: Fidelity Investments
NE 4-Week Chart
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Source: Fidelity Investments
Pacific Drilling (PACD) opened the week at $10.38 on January 28, 2013. The stock closed at $10.62 in after hours trading on Friday, February 1. Thus, shareholders saw the value of their holdings increase by $0.24 per share or 2.31% for the week. Pacific Drilling opened at $9.94 on January 7, 2013. Thus, the stock had a trailing four week gain of $0.68 per share or 6.84%.
PACD 5-Day Chart
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Source: Fidelity Investments
PACD 4-Week Chart
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Source: Fidelity Investments
The strength in the offshore drilling market shines through quite clearly in the market performance of the stocks of these companies. All but one of the stocks saw gains in the past week and even the one that saw a loss did not see much of a loss. The best performer over the past week was Noble, which followed up a disappointing earnings report with solid stock price gains. None of the other stocks were anywhere close to matching Noble's performance. The worst performer was Transocean, which was the only one of these seven companies to see a loss in the past week. Meanwhile, all seven companies saw tremendous gains over the trailing four week period. The best performer overall was Atwood Oceanics. But, both Noble Corp. and Transocean were very, very close to matching Atwood's performance. The worst performance belonged to Ensco.
Disclosure: I am long SDRL, PACD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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