Out Fox The $treet

Interesting stats from Reuters on the average age of offshore oil and gas drilling rigs. Its interesting because a lot has been made of the recent order boom for offshore rigs. Looking at the below data though it suggests that new rigs are very much needed. Seadrill (SDRL) is the only company in the list with an average age below 15. Now I'm sure the rigs for Diamond Offshore (DO) still do a good job, but rigs that are over 30 years old surely can't compete with new modern rigs. Atwoods Oceanics (ATW) has been a favorite of Stone Fox Capital for a while. The company has recently gone on a building spree [see Atwoods Oceanics Is Drilling for New Rigs ]. The company has 6 new rigs on order which is impressive considering the company only has 9 ships now. The industry clearly has an issue with aging fleets. SDRL has some appeal as an investment though they are heavily indebted.  For now we'll remain focused on the investment in ATW and sleep much better knowing the buildi...

Last night Atwoods Oceanics (ATW) reported Q3 results of $.99 that easily surpassed the estimates of $.92. Revenue came in slightly ahead of expectations all suggesting the stock would pop today. Well, evidently the huge 3 month gains and possibly a better understanding by the market that 3 rigs were cold stacked caughtt the street off guard. As far back as the end of October, ATW had made it known that three of the lowest specification rigs, Southern Cross, Seahawk, and Richmond, had been cold stacked. Maybe it caught Wall Street off guard that they don't expect any deals near term as they aren't even actively marketing the rigs. Some analysts only get news from the quarterly earnings reports and calls so maybe this was the first time getting the official word. Although these 3 rigs aren't huge contributors to the bottom line, it is ironic that one of the companies least involved in the Gulf of Mexico was so heavily impacted by the Macondo accident. With rigs moving...

Today Atwoods Oceanics (ATW) announces a contract extension with Chevron Australia for the Atwood Eagle ship for 6 months beyond the delivery date of the new Atwood Osprey. This move is notable for a couple of reasons. First, demand must be improving considering that Chevron is willing to employ both ships during the initial 6 month period as opposed to just transitioning to the new ship. It also helps the financial outlook for ATWs as it keeps one of their biggest ships working for another 6 months. This now places it on contract through roughly the end of Q3 2011 leaving a long time to contract the ship out with a new customer. Atwoods currently only has 3 deepwater ships and a 4th to go into production in 2011 that earn more then $400K+ a day so its crucial that they be working. Second, another interesting point is that the dayrate dropped down to $390K from $450K. Hard to tell if this is just a sweet deal with a customer using 2 ships at once or just the best deal that Atwoods...

Finally the merger between AerCap Holdings (AER) and Genesis Lease (GLS) will be finalized today creating the largest independent airplane leasing company. Its also creates a earnings powerhouse. For 2010, they expect to earn well over $2 with the stock trading below $11 now. A PE of 5 is absurd now that global growth has returned and most of their customers should see growth even in the US market. Not to mention that 5 years earnings growth is placed at 12.5% meaning a fair valuation would be around $25. The finalization of this merger should hopefully bring much more focus to how cheap the combined entity remains. Both stocks have rallied big time since the March 2009 lows, but they still remain insanely cheap on a historical basis. The risks of airlines going bankrupt is greatly reduced now that the financial crisis is largely over. Also, the inability of Boeing (BE) to produce its new plane has helped reduce the competition for their existing planes. It will now be years before th...

Atwoods Oceanics (ATW) as usual posted their normal earnings beat. ATW is a semi deep water focused oil/gas drilling firm. Earnings were down from the solid $1.16 last year, but they did report strong 15% YOY earnings growth for fiscal 2009. Not bad for a stock trading at roughly 10x earnings. Now with oil back around $80, the demand for their services appears to be picking up as evidenced by a couple of recent contracts. Earnings likely bottomed out this Q and analysts expect earnings of at least $4.04 for fiscal 2010. Look for earnings to continue rising with the improved demand environment and new builds on the horizon. 4:59PM Atwood Oceanics beats by $0.06, beats on revs ( ATW ) 37.96 +0.97 : Reports Q4 (Sep) earnings of $0.75 per share, $0.06 better than the First Call consensus of $0.69; revenues fell 18.5% year/year to $131 mln vs the $128.4 mln consensus.

Ironically though it was only an upgrade to a Neutral. Another analyst that has missed the run and yet still not bullish. The time to unload Atwood Oceanics ( ATW ) is when this guy goes to a Buy. For now Stone Fox continues to hold it's position while the stock remains in a beautiful technial position. Pritchard Capital Partners analyst Brian Uhlmer upgraded the company to "Neutral" from "Sell," based on a belief that all the company's bad news is known and baked into the current share price. Also, he noted that the company has helped its margins by cutting operating costs in recent months. Uhlmer held to his fourth-quarter profit estimate of 59 cents per share, assuming the company was not able to further cut operating costs in September. Analysts polled by Thomson estimate a profit of 66 cents per share, on average.