Ensco International (NYSE:ESV) has a large fleet of offshore rigs and is set to add to that fleet over the next few years as the company's new build program continues. The company is confident in future demand for its equipment and recently ordered the construction of two new premium jack up rigs.

TUTORIAL: How To Trade With Margin

Fleet Overview
Ensco International owns the second largest fleet of offshore rigs, with 76 units. This includes seven drill ships, 20 semi-submersibles and 49 jack up rigs, with some currently under construction. Ensco International increased the size of its fleet earlier this year through a merger with Pride International. The merger closed at the end of May 2011, and Ensco International added 26 rigs to its fleet.

First Quarter of 2011
Ensco International reported earnings per share from continuing operations of 45 cents per share in the first quarter of 2011, down considerably from the $1.12 per share reported in the same quarter of 2010. Rig utilization came in at 72% for the quarter, also down from last year's rate of 80%.

Despite the unused capacity in the market, Ensco International is optimistic about future demand. The company ordered two new jackups rigs during the first quarter of 2011. The rigs will be suitable for drilling in harsh environments, including parts of the North Sea, and will be ready in 2013.

Newbuild Program
Ensco International has been engaged in building new rigs for years, with 13 rigs delivered since 2004. The company has seven more under construction, including the two harsh environment jack up rigs ordered during the most recent quarter. These seven rigs are set to be completed and delivered from 2011 through 2013.

Only one of the seven rigs under construction is currently contracted as of May 2011. Ensco International reported that the Ensco 8504, an ultra deepwater semi submersible, is set to start work for Total (NYSE:TOT) for six months at a day rate of $423,500 per day.

Other Players
Other offshore drillers include Vantage Drilling (NYSE:VTG), which owns six rigs, including four jack ups and two drill ships. The company has contracts on five of these rigs, with the sixth under construction.

Atwood Oceanic (NYSE:ATW) owns more than a dozen offshore rigs, and recently contracted one of the company's rigs to BHP Billiton Petroleum (NYSE:BHP) at an initial day rate of $376,000 per day.

Bottom Line
Ensco International has the second largest offshore fleet and is getting even bigger through a multiyear new build program. The company expressed confidence in future offshore activity by adding two jack up rigs to this program in early 2011. (So you've finally decided to start investing. But what should you put in your portfolio? Find out here. See How To Pick A Stock.)

Related Articles
  1. Chart Advisor

    Rare Earth Metals Continue To Struggle

    Rare earth metals are used in many of today's products and many investors are wondering if consumer demand is enough to offset the global economic slowdown. We'll take a look at how they are ...
  2. Stock Analysis

    GE and the Future of Energy Storage

    Find out how energy storage, led by GE, is surging as power companies search for methods to smooth usage and backstop new technologies.
  3. Stock Analysis

    Analyzing Home Depot's Return on Equity (ROE)

    Discover what Home Depot's return on equity (ROE) ratio says about the performance of the company and how it relates to historical averages and industry trends.
  4. Investing

    Asset Manager Ethics: Acting With Competence and Diligence

    Managers must make investment decisions based on their personal investment process, which in turn should be based on solid research and due diligence.
  5. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  6. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  7. Economics

    Why It Is Important to Follow Crude Oil Inventories

    Discover what oil inventories are, how they are communicated and what important insights they provide into the state of the oil market.
  8. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  9. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  10. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  4. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  5. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  6. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>

You May Also Like

Trading Center