A quick look at the chart for Atwood Oceanics shows a familiar pattern for those who have been following the price action of companies in the offshore contract drilling industry. Shares of Atwood have declined by approximately 30 percent from the trading levels that prevailed in the weeks prior to the April 20, 2010 Deepwater Horizon disaster. However, Mr. Market is generally incapable of evaluating the details behind specific situations and appears to have unfairly discounted Atwood based on one surprising fact: Less than two percent of the company’s revenues in the current fiscal year were derived from activities in the Gulf of Mexico. Read this article for more details.
Noble Corporation predicts that additional capital expenditures necessary to comply with new regulations for drilling in the Gulf of Mexico should not exceed $10 million per rig. In the company’s second quarter 10-Q report filed with the SEC yesterday, management indicates that the exact amount required for rig retrofits cannot be precisely determined pending the release of final regulations. The amount required for each rig is expected to vary based on its age. It is also possible that Noble may incur similar costs for certain rigs that are presently located outside the Gulf of Mexico. Read this article for more details.
In a presentation released today, Contango Oil & Gas Company CEO Ken Peak provides more details regarding his view of the situation unfolding in the Gulf of Mexico. We have commented on Contango Oil & Gas in the past and believe that Mr. Peak provides some of the most useful commentary on oil and gas economics in the Gulf of Mexico. Recently, Contango announced new production and signaled an intent to return cash to shareholders through a special dividend or continued share repurchases. Read this article for more details on Mr. Peak’s presentation.