Pride a Top Pure-Play Driller

Pride International, Inc. (PDE - Analyst Report) reported solid third-quarter results, cautioned of near-term softness in the GoM jackup market and announced plans to divest its shallow-water Gulf of Mexico [GoM] fleet to become a pure-play deepwater driller.

Revenue and operating earnings from the company’s deepwater fleet increased 37% and 60% year over year, respectively. With a $10 billion (including bonus) of backlog, Pride International offers significant earnings and cash flow visibility. We have lowered our earnings estimates to reflect a soft outlook for the GoM jackup fleet and relatively higher costs. Our new 2008 and 2009 EPS estimates are $3.62 and $4.00, down from $3.65) and $4.30, respectively.

Pride’s diversified portfolio of drilling assets, both in terms of rig class as well as areas of operation, provides it with a strong leverage to the current offshore drilling cycle. We expect demand for offshore drilling assets, particularly on the deepwater side, to remain robust in the foreseeable future.

Read the full analyst report on PDE