“There will be blood,” one analyst noted this morning about Hornbeck Offshore Services (HOS) –but his observation could apply to just about the entire offshore-services sector, as Atwood Oceanics (ATW), Diamond Offshore (DO) and Ensco (ESV) tumble.
European Pressphoto Agency Shares of Hornbeck Offshore Services have slid 6.8% to $38.61, while Atwood Oceanics has fallen 3.5% to $47.82, Diamond Offshore has dropped1.7% to $53.68 and Ensco has slipped 0.9% to $50.
Hornbeck Offshore Services has plunged after missing by a whopping 16 cents. Howard Weil’s John Donnel explains what happened:
We were concerned about this print with our earnings estimate so far below consensus, and the miss versus Street expectations could weigh on the stock. OSV operating metrics took a larger step back than we had modeled during the quarter and we foresee the call will focus on dayrate trends in particular, as average [offshore support vessel] dayrates decreased sequentially for the first time since 2Q11. This, along with an increase in the amount of planned dry dock days is likely to move our near-term earnings estimates down. However, expenses should be lower than prior projections and the [multi-purpose offshore vessels] fleet continues to generate impressive results. The Company's longer-term outlook for a gradual recovery in the [Gulf of Mexico], weighted to the back half of the year, remains consistent with previous guidance and our expectations for the market. We continue to believe HOS will generate meaningful earnings and cash flow growth, especially as its newbuild vessels deliveries coincide with contracted ultra-deepwater rig start-ups in the GOM
Atwood Oceanics, meanwhile, reported a profit of $1.13, beating forecasts for 97 cents. Revenue of $273.1 million, however, fell short of the Street consensus for $282.08 million. Cowen’s J.B. Lowe digs into the results:
Results excluded a $34 million dollar gain on the sale of the Vicksburg during the quarter (+$0.46 per share assume a 30% tax rate). The company’s F2Q14 release marked its first quarterly earnings miss in eight quarters. Total operating expenses of $199 million were roughly in-line with our $198 million estimate. The company missed our top line forecast by roughly 5%, and EBITDA of $112 million was below our $125 million estimate. EBITDA margins for the quarter were 40.8% versus our forecast of 47.2%…
Contract drilling revenues of $273 million were below our $287 million forecast. Better-than-expected revenues from ATW’s jackup segment were more than offset by weaker-than-expected revenues from its ultra-deepwater and deepwater segments. UDW revenues of $119.9 million fell short of our $124.6 million forecast largely due to start-up issues on the Atwood Advantage that resulted in 22 zero-rate days in March. The deepwater and jackup segments contributed revenues of $64 million and $76.2 million respectively, compared to our forecasts of $80.2 million and $70.7 million
Citigroup’s Robin Shoemaker and Paul Cherian lowered their estimates on Diamond Offshore but raise their price target to $47 from $42.:
We lower our estimates after reducing our utilization forecasts on various rigs in the DO fleet and increasing our 2Q14 operating cost estimate to reflect expenditures on the Onyx and Alliance rigs. We have raised our price target to $47 on higher multiples, despite the lowered earnings, based on the company's impressive cost management strategy and the short-term work opportunities achieved in spite of the current offshore supply-demand imbalance.
And by the look of things today, no one’s willing to bet that the offshore supply-demand imbalance is going to end any time soon.
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