Pritchard Equity Research: Oil Services Update
According to Pritchard Equity Research, “XDC’s 2Q10 EPS of 2c came in below our 4c estimate on lower utilization due to significant idle time from rigs in Mexico. This trend is quickly reversing, with 75% of the fleet now contracted. XDC secured two contracts in US shale plays (Bakken and Eagle Ford) and is actively pursuing opportunities for the four idle Mexican rigs in the US, Mexico and Australia.”
“The Commercial Register of the Canton of Zug rejected RIG’s application to register the first of four planned partial par value reductions (~82c per quarter) on the basis RIG has been served in Switzerland with several complaints from lawsuits filed in the U.S. Disappointing to existing investors, but RIG warned this was a possibility in its 10-Q and plans to appeal the decision. We continue to believe RIG’s indemnification with BP will keep total costs below $200MM and that the dividend will eventually be paid as RIG has already allocated the necessary funds and can fund Macondo liabilities with capital on the balance sheet and operating cash flows,” the analysts add.
“Oil gains, accounting for 25 of BHI’s 35 rig gain (~71%), drove the advance as 19 incremental vertical oil directed rigs are now drilling, of which 18 went to work in the Permian. This is not a new trend given YTD the Permian's rig count is +53%, or 108 rigs, compared to BHI's rig count +39%. The beneficiaries of the strong W. TX activity are PTEN and UDRL, which each added 4 rigs on the week, and BAS,” Pritchard Equity Research mentions.
