Rowan Companies plc (RDC) announced its monthly report of drilling rig status. In the reported period, the Bob Keller rig was awarded a 10-year extension with Saudi Aramco at a higher dayrate. Similarly its EXL I rig was awarded a one-year contract with Petronas in Indonesia that commenced at the end of Oct 2013 at $160,000 per day, in line with the previous day rate.
On the flip side, its Gorilla VII rig reported increased fourth quarterly off rate time by 19 days to 57 days for leg repairs and weather delays. That rig is expected to return to service at the beginning of Dec 2013. Similarly, its Gorilla VI rig also reported increased off rate time for the first quarter of 2014 by 46 days to 59 days for repairs, upgrades and inspections. The rig is expected to return to service at the beginning of Mar 2014. Finally, its Rowan Viking rig increased off rate time for the first two quarters of 2014 by 15 days to 120 days for inspections and equipment modifications expected to commence at the end of Feb 2014 instead of mid-Feb 2014.
The company reaffirmed its expected out of service time at 9% and 10% of available rig days for the fourth quarter of 2013 and full year 2013, respectively. For full-year 2014, the company continues to expect jackup out of service time between 7% and 9% of available rig days.
Rowan’s premium high-specification rig fleet enjoys greater utilization than most other shallow-water fleets. The growing demand in the global jackup market signifies the ever-increasing tendering activity that has increased 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. During the quarter, the company experienced strong demand as well as solid dayrates for high-specification jackups in most of the markets.
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 rising demand and the resultant higher jackup day rates to lead to strong earnings growth.
Rowan holds a Zacks Rank #3 (Hold). However, some better-ranked oil and gas stocks include Harvest Natural Resources Inc. (HNR), VOC Energy Trust (VOC) and SM Energy Company (SM). All these stocks carry a Zacks Rank #1 (Strong Buy).
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