This is a stock that D. Gardner owns, not sure if its an active SA pick.
I bought shares around todays closing price 7.25.
I think if they survive this downturn we go back to its all time high around 60.
I think if they survive this downturn we go back to its all time high around 60.
Atwood Oceanics Inc. (ATW) is an offshore drilling contractor at the bottom of an oil cycle.
Business Summary
Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. As of November 10, 2015, it owned a fleet of 11 mobile offshore drilling units, as well as 2 ultra-deepwater drill ships under construction. The company was founded in 1968 and is headquartered in Houston, Texas.
https://ca.finance.yahoo.com/q/pr?s=ATW
Compared to its bigger competitors, Diamond Offshore (DO) and Transocean (RIG), the numbers look pretty good
https://ca.finance.yahoo.com/q/co?s=ATW
Revenue didn’t start falling until 2016 but EPS did not keep up with the revenue from 2011 to 2015. Revenue doubled while EPS only grew by 50%
http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=110…
It is very difficult if not impossible to know the bottom of a commodity cycle. ATW has already had three bear traps since the 2013 top
http://softwaretimes.com/pics/atw-09-23-2016.gif
An interesting stock but hande with care.
Denny Schlesinger
6 Likes
to me deepwater oil is the most expensive, and requires the largest upfront expenditures.
I would expect deepwaters recovery to take longer than the onshore frackers
Thanks Tom and Captain,
Yes I have read that too.
I talked to an economist at a fairly well known think tank
Company and he said that offshore drilling is not going away
Yes it is risky, they have a backlog cliff
and new contracts have day rates less than
Half of what they were getting.
I’m going on the faith that this company knows how to
Weather a downturn like this and that they have
Previous experience since they’ve been around since the 1960s.
They have a good recent presentation on their website.
I also feel like the oil “movie” keeps
playing over and over in a range of low 40s
Up to 60 and 70 even topping 100 before this.
Oil doesn’t have to go to 100 for them to get contracts back
. I am encouraged by an interview with Robotti
A hedge fund manager familiar with and long Atw.
He has followed the company since the 70s
My position is about 3%.
I only buy single stocks with 20% of my portfolio.
The rest in US index funds split between the total market
and the s&p 500.
Thanks for posting all that research Denny!
Thanks for posting all that research Denny!
My pleasure! I’m interested in oil so ATW is of interest to me so I did the research. I have one oil service company, Core Labs (CLB), which has advantages over Atwood Oceanics, it is asset light, it services a larger segment of the oil industry, and it has fewer competitors.
http://invest.kleinnet.com/bmw1/stats20/CLB.html
The stock bottomed out in January but I’m still 12.5% underwater. Investing in cyclical commodity markets is quite tricky. I’m also following (no position) Oceaneering International (OII) which is more like Atwood Oceanics. It is still falling
http://invest.kleinnet.com/bmw1/stats20/OII.html
Of the three I think CLB is the better choice
http://softwaretimes.com/pics/clb-09-25-2016.gif
Denny Schlesinger
I worked with Oceaneering some. Also looked over some of thier tech in 2001 at the offshore conference in Houston.
They have a lot of talent and a lot of knowledge that would be difficult to duplicate.
Of course it will do no good if they run out of cash before companies start drilling again.
Cheers
Qazulight
1 Like
I’ll throw my 2 cents in here being burned so bad over my investing career by these type of risky cyclical stocks.
If I only had 20% of my portfolio to invest in single stocks I would not touch this stock with a 10’ pole no matter what this or that “expert” had to say about it. If I had all the money back that I lost on risky cyclical stocks I would be taking a month long trip to Hawaii every year on it.
Color me boring but I would put that 20% in a profitable, stable, and steadily growing company.
I realize you probably won’t take this advice because it sounds like you have already invested but perhaps this will keep someone else from doing so.
Good luck, hope I am wrong on this one.
6 Likes
I posted this to the SA ATW board on September 2nd:
After owning ATW for 6 years I decided to sell. I know, I know the companies in the oil patch and many see the oil market bottoming now or early 2017 at the latest. That may be. However, I’m tired of waiting for the oil market to turn.
I’ve been thinking about it a lot. I rarely sell anything. Typically I hold until the something changes within the company OR the competitive landscape in which the company operates shifts to the detriment.
I also keep hearing the cost to get oil/gas out of the ground has halved from just a few years back. I think this leaves the sea dwellers like ATW in the cold. I also read through the ATW’s latest conference call. The theme? We are waiting for the oil market to turn. Problem is it may be YEARS before this ever actually occurs. They also retired some debt on the cheap which is good but I’m looking for near future business activity to pick up. I just don’t see the catalyst that’ll allow this company to thrive in the near future. ATW is well run but it doesn’t mean much if you have scarce operating activity.
Ben
2 Likes
if they survive this downturn
I’ve worked in the offshore oil industry since 1980. IMO, this is the only thing that is important. Eventually, the price of oil will rise. When? Who knows. Oilfield companies that are still in business will flourish, but first they have to survive.
DT
RIP Arnie
3 Likes
Thanks everyone for all the feedback.
Denny, I will take a look at CLB.
ATW and CLB rallied nicely today on OPEC’s agreement to cut production.
Wall Street rallies as OPEC reaches output deal
http://finance.yahoo.com/news/wall-street-opens-higher-oil-1…
Denny Schlesinger
1 Like