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Ensco plc

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Ensco’s merger with Atwood Oceanics will bring together two leading offshore drillers with premium assets that cover the world’s most prolific basins along with a diverse customer base. Moreover, Ensco bagged several three additional contracts in Saudi Arabia during the first quarter. This shows Ensco’s ability to clinch orders even amidst macro volatility. While the bigger ‘Ensco’ should fare better, given the combined entity's size and scope of operations, it remains heavily exposed to offshore drilling's very weak fundamentals. We are concerned about Ensco’s weak balance sheet. All those weaknesses are reflected in Ensco’s unimpressive pricing chart snapshot of the last one year. During the first quarter of 2018, Ensco’s loss was wider than expected and revenues missed the Zacks Consensus Estimate. The weak results stemmed from fall in utilization, lower average day rates and high expenses.

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