Drilling contractor AtwoodOceanics, Inc. has entered into a new four-year Enterprise Bargaining Agreement (EBA) with employees working off the coast of Australia.
Per the deal, the current wage level has been reset so that the company can better manage operations amid a weak offshore drilling business scenario. In the first year of the accord, the cost of employees will get lowered by more than 19%.
With this, Atwood will be able to provide services at more attractive day rates. It is to be noted that the new EBA will be effective Nov 24, 2017, but is awaiting consent from the Australian Fair Work Commission.
Given the current offshore drilling business environment, it is not surprising that the offshore employees have agreed to the wage reduction.
Headquartered in Houston, TX, Atwood is among the leading drilling players having operations in the offshore market. Presently, the company has ownership interest in 10 offshore drilling rigs. Two of Atwood’s drilling units that are capable of operating in ultra-deepwater are under construction.
The balance sheet of the company is solid as cash balance has been improving since fiscal year ended September 2014. Also, long-term debt load has gone down significantly over the same time period.
However, the company’s price chart fails to encourage. Year to date, Atwood’s stock lost 49.6%, underperforming the 47.7% decline of the industry.
Atwood currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
A few better-ranked players in the energy sector are TransCanada Corporation (TRP - Free Report) , Transmontaigne Partners LP (TLP - Free Report) and Range Resources Corporation (RRC - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company posted an average positive earnings surprise of 4.06% over the last four quarters.
Transmontaigne – headquartered in Denver, CO – is involved in the transportation and storing of refined petroleum products. The firm recorded an average positive earnings surprise of 6.60% over the last four quarters.
Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 116.5%.
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