ESV - Embedded Expectations Analysis - 2018 06 08
Ensco plc (ESV:USA) currently trades near historical lows, and well below asset values, relative to UAFRS-based (Uniform) Assets, with a 0.5x Uniform P/B, implying bearish expectations for the firm. However, management is confident in their new drillship, customer activity, and Brazilian operationsSpecifically, management is confident that their latest newbuild delivery, the ultra-deepwater drillship ENSCO DS-10, recently commenced its maiden contract in offshore Nigeria on a major development for a customer, and that customer activity for programs in shallow water will likely continue to grow, improving utilization for the global jackup fleet. Additionally, they are confident in the attractiveness of offshore investment in the U.S. Gulf, and that over the past year and a half, a total of 34 deepwater exploration blocks have been awarded in Brazil, with the most recent capturing a record $2.4bn in signature bonuses
Ensco is an offshore contract drilling company engaged in providing offshore contract drilling services to the international oil and gas industry. As of Dec 31 2017, Co. owned and operated an offshore drilling rig fleet of 62 rigs. Co.'s rig fleet includes 12 drillships, 11 semisubmersible rigs, four moored semisubmersible rigs and 38 jackup rigs, including rigs under construction. Co.'s business consists of three operating segments: floaters, which includes its drillships and semisubmersible rigs; jackups; and other, which consists of management services on rigs owned by third-parties. Co.'s two reportable segments, floaters and jackups, provide one service, contract drilling.
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