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. Investing

    Redefining the Stop-Loss

    Using Stop-losses for trading doesn’t mean ‘losing money’, but instead think about the money you'll start saving once you learn how they work.
  2. Fundamental Analysis

    10 Major Companies Tied to the Apple Supply Chain

    Apple has one of the best supply-chain models. Here are some of the top businesses involved, and the benefits and challenges for all.
  3. Markets

    The 5 Biggest Chinese Natural Gas Companies

    Read about the top five Chinese natural gas companies as measured by gas production volume and learn a little more about their business operations.
  4. Economics

    Who Wins With Low Energy Prices? 

    Low oil prices are here to stay for some time. Which economies will benefit or lose from the low oil price regime?
  5. Options & Futures

    Analyzing The 5 Most Liquid Commodity Futures

    Crude oil leads the pack as the most liquid commodity futures market, followed by corn and natural gas.
  6. Term

    What are Non-GAAP Earnings?

    Non-GAAP earnings are a company’s earnings that are not reported according to Generally Accepted Accounting Principles.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI US 1000

    Find out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
  8. Options & Futures

    Use Options to Hedge Against Iron Ore Downslide

    Using iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
  9. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  10. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!