The board of directors of Rowan Companies plc (RDC), a provider of offshore contract drilling services, initiated a quarterly cash dividend of 10 cents per outstanding share of common stock. The first dividend is expected to be paid in the second quarter of 2014.
Rowan’s decision to initiate a quarterly dividend reflects its steady earnings growth from its well positioned jackup fleet and entry into the ultra-deepwater market with four highly capable drillships. For full-year 2014, Rowan expects jackup out of service time between 7% and 9% of available rig days.
The company does not currently expect any out-of-service days in 2014 for the drillships. Rowan also expects operational downtime of approximately 5%.
Rowan’s premium high-specification rig fleet enjoys greater utilization than most other shallow-water fleet. The growing demand in the global jackup market signifies the ever-increasing tendering activity that has raised the dayrates.
Rowan is positioned advantageously with its several contract rollovers in 2014. The contracts on these rollovers will further help the company in reducing rig downtime days and provide impetus for increased operations.
Houston, Texas-based Rowan Companies is a provider of international and domestic contract drilling and aviation services. Lately, the company is experiencing strong demand as well as solid dayrates for high-specification jackups in most of the markets. The company has a fleet of 34 offshore drilling units, including four ultra-deepwater drillships, three of which are currently under construction, and 30 jackup rigs, 19 of which are rated high-specification.
The company's fleet is located worldwide, including West Africa, the Middle East, the North Sea, Trinidad, Egypt, Southeast Asia and the Gulf of Mexico. Three of the four ultra-deepwater drillships are under three year contracts.
Going forward, Rowan expects further strengthening in the jackup markets, especially demand for high-spec rigs, along with strong demand and encouraging new fixtures in the ultra-deepwater markets. To capitalize on this, the company is focused on improving the operation of newbuild drillships. Rowan expects growing demand and the resultant increase in jackup dayrates to lead to strong earnings growth.
Rowan currently holds a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked energy players like Seadrill Partners LLC (SDLP), Athlon Energy Inc. (ATHL) and Warren Resources Inc. (WRES). All these stocks sport a Zacks Rank #1 (Strong Buy).
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