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. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Fundamental Analysis

    4 Predictions for Oil in 2016

    Learn four predictions for oil markets in 2016 including where prices are heading and the key fundamental factors driving the market.
  4. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  5. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  6. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  7. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  8. Stock Analysis

    The Biggest Risks of Investing in SandRidge Stock

    Learn about the significant risks of investing in SandRidge. Read how the company may not be able to service its substantial debt load.
  9. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  10. Stock Analysis

    Analyzing Porter's Five Forces on Under Armour (UA)

    Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of the Porter's Five Forces Model.
RELATED FAQS
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center