gary17 Posted September 29, 2013 Share Posted September 29, 2013 Does this explain it? http://247wallst.com/energy-business/2012/10/02/demand-for-midwater-rigs-to-rise-rig-do-esv-ne/ http://gcaptain.com/north-rates-push-higher-midwater/ Link to comment Share on other sites More sharing options...
Hielko Posted September 29, 2013 Share Posted September 29, 2013 The market appears to be pricing this firm on that basis. Does anyone have a reason to why the North Atlantic pricing should not revert to the current non-NA mean? I think it's just a coincidence that the current market price matches that assumption. It wouldn't make sense if that is indeed the reason; 1. the company has locked in high rates for the next couple of years 2. this also implies that the market doesn't expect that rates go down anytime soon otherwise you wouldn't lock in high rates as a buyer. What will happen to rates in the (far) future is anybodies guess. There is no easy arbitrage to profit from higher rates in the north sea because moving a rig from the other side of the world and upgrading it to the north sea specific regulations is a very expensive job. But if rates stay high relative to other area's I'm sure it's going to happen and if supply increases it would be logical to see rates go down. Link to comment Share on other sites More sharing options...
bz1516 Posted September 29, 2013 Share Posted September 29, 2013 In response to the question about why this is a public company - it is the only way management and its principal shareholder can grow the company and pay a current distribution without their funding future growth themselves. The biggest threat to the mid depth North Sea market is if there is any real weakness in the deep water market which would create a surfeit of rigs looking for a home. These would naturally step down to the mid depth market creating pressure on dayrates in the North Sea. That's the market risk for AWLCF imo. Link to comment Share on other sites More sharing options...
gary17 Posted September 30, 2013 Share Posted September 30, 2013 I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? 3 -- I noticed the Wilphoenix rig has a 180 day options contract starting May 2013 and Wilhunter has 275 day option starting Dec 2015 - does anyone know if those options have been firmed up or still options at this point? Assuming the market is not strong next year, there would be quite a bit of un-utilized time for the rigs. Is this reflected in the share price or is the market thinking this will get exercised with high degree of certainty. thanks Link to comment Share on other sites More sharing options...
siddharth18 Posted October 1, 2013 Share Posted October 1, 2013 I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? 3 -- I noticed in the Wilphoenix rig has a 180 day options contract starting May 2013 and Wilhunter has 275 day option starting Dec 2015 - does anyone know if those options have been firmed up or still options at this point? Assuming the market is not strong next year, there would be quite a bit of utilized time for the rigs. Is this reflected in the share price or is the market thinking this will get exercised with high degree of certainty. thanks Regarding #3: "Hand off of WilPheonix from Premier to Apache/Tataq - There will be no gap from May to Nov 2014. If Premier does not exercise its option, they will hand off the rig to Apache/Tataq creating no gap in between. Premier is subletting the rig and Awilco gets to participate in the delta of the dayrates during the sublease. " Source Link to comment Share on other sites More sharing options...
DTEJD1997 Posted October 1, 2013 Author Share Posted October 1, 2013 I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? To my knowledge, AWILCO produces NO barrels of oil. They are simply a leasing company. They have no interest in oil production or leases. They lease their rigs to oil companies who produce the oil. I further believe that one of the rigs is not actually drilling or producing oil, it is capping off wells that are no longer economically viable. I believe it is also involved in maintenance on well heads & such. I also believe that AWILCO is incorporated in the UK for tax purposes. They have tax incentives for oil production. I would also suspect that being incorporated in Britain my help with licensing & such? Link to comment Share on other sites More sharing options...
gary17 Posted October 1, 2013 Share Posted October 1, 2013 Thanks - I had suspected they were probably just renting the rigs out but wasn't sure - I mean 'contract drilling' implies they are hired to drill and have a day rate of x..... I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? To my knowledge, AWILCO produces NO barrels of oil. They are simply a leasing company. They have no interest in oil production or leases. They lease their rigs to oil companies who produce the oil. I further believe that one of the rigs is not actually drilling or producing oil, it is capping off wells that are no longer economically viable. I believe it is also involved in maintenance on well heads & such. I also believe that AWILCO is incorporated in the UK for tax purposes. They have tax incentives for oil production. I would also suspect that being incorporated in Britain my help with licensing & such? Link to comment Share on other sites More sharing options...
siddharth18 Posted October 1, 2013 Share Posted October 1, 2013 I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? To my knowledge, AWILCO produces NO barrels of oil. They are simply a leasing company. They have no interest in oil production or leases. They lease their rigs to oil companies who produce the oil. I further believe that one of the rigs is not actually drilling or producing oil, it is capping off wells that are no longer economically viable. I believe it is also involved in maintenance on well heads & such. I also believe that AWILCO is incorporated in the UK for tax purposes. They have tax incentives for oil production. I would also suspect that being incorporated in Britain my help with licensing & such? Just to be clear, that while it's incorporated in UK, Awilco's effective tax rate is nowhere near UK's statutory corporate tax rate. I assume that any/all assets of Awilco (such as the rigs themselves) that could been domiciled offshore have been. And they ought to...their parent company which is proficient in shipping and cruise business is no stranger to tax avoidance! Link to comment Share on other sites More sharing options...
Hielko Posted October 1, 2013 Share Posted October 1, 2013 I have a couple of questions - I was wondering if someone following the thread knows the answer: 1 -- How much oil (barrels?) are they producing per day? I don't see this being discussed anywhere in the reports; just like to get a sense of the economics here. 2 -- Why is the company incorporated in the UK instead of Norway ? To my knowledge, AWILCO produces NO barrels of oil. They are simply a leasing company. They have no interest in oil production or leases. They lease their rigs to oil companies who produce the oil. I further believe that one of the rigs is not actually drilling or producing oil, it is capping off wells that are no longer economically viable. I believe it is also involved in maintenance on well heads & such. I also believe that AWILCO is incorporated in the UK for tax purposes. They have tax incentives for oil production. I would also suspect that being incorporated in Britain my help with licensing & such? Just to be clear, that while it's incorporated in UK, Awilco's effective tax rate is nowhere near UK's statutory corporate tax rate. I assume that any/all assets of Awilco (such as the rigs themselves) that could been domiciled offshore have been. And they ought to...their parent company which is proficient in shipping and cruise business is no stranger to tax avoidance! Correct. The two rigs are owned by subsidiaries in Malta, and the effective tax rate of the company is around 6~8% or so. Link to comment Share on other sites More sharing options...
siddharth18 Posted October 7, 2013 Share Posted October 7, 2013 Like an automatic DRIP set up through a broker? Because I don't believe it'd be possible since it's a foreign listed, illiquid or trades on a major US exchange. Of course each brokerage sets its own rules so you'll just have to double check with your broker. In the meanwhile, where's a chart I found: http://i.imgur.com/Gx4Og0y.png BTW - has anyone spoken to management about if they would engage in share buybacks at some price/time? TIA. Link to comment Share on other sites More sharing options...
roughlyright Posted October 7, 2013 Share Posted October 7, 2013 Hello all, I am trying to read this article about Awilco at Seeking Alpha. IF any one has access to the SA Pro can you post it here or atleast PM this to me? http://seekingalpha.com/article/1656072-awilco-drilling-a-sustainable-22-dividend Greatly appreciate your help Rouglyright Link to comment Share on other sites More sharing options...
siddharth18 Posted October 9, 2013 Share Posted October 9, 2013 Heavy buying/volume in Oslo (14M Krone) with fewer sellers. We may be setting up for a run: http://i.imgur.com/eImN5yF.png Link to comment Share on other sites More sharing options...
gary17 Posted October 18, 2013 Share Posted October 18, 2013 I'm wondering if anyone has thought about the replacement cost of Awilco ... How much would it cost someone to come up with two old rigs and get to the same earnings level at less than 500M? Tia Link to comment Share on other sites More sharing options...
siddharth18 Posted October 18, 2013 Share Posted October 18, 2013 I'm wondering if anyone has thought about the replacement cost of Awilco ... How much would it cost someone to come up with two old rigs and get to the same earnings level at less than 500M? Tia I think the question is who'd want to sell for economical reasons? If the day rates are high and increasing, they'd rather keep it for themselves unless forced by Government/regulator to divest (which is what happened with Transocean). One would just have to buy a new rig, then? Link to comment Share on other sites More sharing options...
gary17 Posted October 18, 2013 Share Posted October 18, 2013 So two new rigs cost more than 500M ? (Awilcos MC) Link to comment Share on other sites More sharing options...
DTEJD1997 Posted October 18, 2013 Author Share Posted October 18, 2013 I'm wondering if anyone has thought about the replacement cost of Awilco ... How much would it cost someone to come up with two old rigs and get to the same earnings level at less than 500M? Tia The replacement cost is quite high...but there are several factors in addition to that: A). It is not quite as simple as pulling rigs from other parts of the world. It is possible to do that, but you would have to bring it into the yard for maintenance, retrofitting and strengthening. The North Sea is a harsh environment and rigs have to be upgraded to work there. That costs money, but it also costs TIME. B). Moving the rig costs a substantial amount for the tugboat rental and also 2-3 months of time. C). You have to have certifications & permits to work the North Sea. Not impossible to get, but Tom, Dick, & Harry aren't just going to sail into the North Sea and start drilling. This is also take some amount of time & money. D). New rigs cost $500MM+ The highest best use of them is to be put into the extremely deep waters that they are designed to work in, not the North Sea area that Awilco is working in. So the end result is that you have somewhat of a protected market in the North Sea. Awilco management got LUCKY, but they also had the foresight and patience to target this market. The end result is that there could be competition brought in, but it might take competition a year to get ready and get into the market. What competitor is going to spend the money and a year's time to get in the market? A limited amount... Link to comment Share on other sites More sharing options...
siddharth18 Posted October 21, 2013 Share Posted October 21, 2013 AWDR - Letter of Award accepted from Premier Oil Awilco Drilling PLC has accepted a Letter of Award (LOA) from Premier Oil UK Limited relating to the 250 days of options in the contract announced on 7th May 2012. The total exercised option period will now extend until completion of the 2014 drilling program or 31st October 2014, whichever comes earlier, but will be not less than 140 days. The previously declared 70 days of this option has been extended to 80 days. The additional term of the option period will have a minimum value based on a 60 day duration of USD 26.6 million and a maximum value of USD 73.0 million. The exercised option period is expected to commence early March 2014. There are no further options under this contract. WilPhoenix is one of Awilco Drilling's two Enhanced Pacesetter semi-submersibles and is equipped for drilling in water depths up to 1,200 ft. Aberdeen, 21 October 2013 For further information please contact: Jon Oliver Bryce, CEO Phone: +44 1224 737900 Cathrine Haavind, IR Manager Phone: +47 93 42 84 64 This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. Source: http://www.awilcodrilling.com/4142-Financial-News-Message?msg=http://cws.huginonline.com/A/147077/PR/201310/1736804.xml Link to comment Share on other sites More sharing options...
siddharth18 Posted October 21, 2013 Share Posted October 21, 2013 Double average volume in the US, huge divergence between oslo and the adr. Stock finally getting attention from retail or institutions? Yeah I noticed. Maybe. There was huge volume in oslo too. What I want to know is who the hell is selling at these prices, and why? Link to comment Share on other sites More sharing options...
NoCalledStrikes Posted October 23, 2013 Share Posted October 23, 2013 Who is selling is a good question, People who bought to hold for the dividend wouldn't sell unless the dividend is at risk. People who bought for the stock to reprice to account for the new dividend would stay until the yield drops some more. People who thought something bad was in the works wouldn't wait until a new high to sell. This leaves People who bought really low and just want to lower their weightings of AWILCO in their portfolio. People who are hedging and not really selling AWILCO by itself but as part of a package of stocks. Firms which have a really small percentage investment in AWILCO and just want to clear the position from their portfolio. And other reasons I am sure, but none of them strike me as based on the economics of AWILCO itself. Link to comment Share on other sites More sharing options...
gary17 Posted October 23, 2013 Share Posted October 23, 2013 How about just the concern of a correction of the market in general and any economic turn will likely have an impact Who is selling is a good question, People who bought to hold for the dividend wouldn't sell unless the dividend is at risk. People who bought for the stock to reprice to account for the new dividend would stay until the yield drops some more. People who thought something bad was in the works wouldn't wait until a new high to sell. This leaves People who bought really low and just want to lower their weightings of AWILCO in their portfolio. People who are hedging and not really selling AWILCO by itself but as part of a package of stocks. Firms which have a really small percentage investment in AWILCO and just want to clear the position from their portfolio. And other reasons I am sure, but none of them strike me as based on the economics of AWILCO itself. Link to comment Share on other sites More sharing options...
Packer16 Posted October 23, 2013 Share Posted October 23, 2013 Given the nature of the contracts, I don't think a slowing economy will have an impact until contract renewal in 2018. These guys do have a different model than others in the industry and plan on maximizing distributable cash flow without buying new rigs. Similar to a royalty trust versus an operating E&P company. Packer Link to comment Share on other sites More sharing options...
siddharth18 Posted October 23, 2013 Share Posted October 23, 2013 Just in general, based on my observations, I think most investors first consider selling stocks in their portfolio that are above fair value or close to fair value. I think Awilco is one of the most attractive stocks I can find in the market today and I think a lot of holders would agree with me. For this reason, I don't believe it's at a risk of a nasty selloff like some other stocks. That said, obviously there are no guarantees. Oil could tank to $50/barrel causing lessee to flee. And speaking of a breach, what is usually the outcome of such breaches? Since rigs are normally leased to the big boys of E&P, would Awilco be able to recoup their contractual revenues? Or just a fraction of it, in a settlement? Link to comment Share on other sites More sharing options...
DTEJD1997 Posted October 23, 2013 Author Share Posted October 23, 2013 I would not be worried about breaches under most reasonable economic circumstances, even if oil went to $50/barrel. If oil went to $10 or $20 barrel, we are going to have problems... The companies Awilco is working with have assets that can attached in case of lawsuit. The only problem would be if the go bankrupt, or almost so...So even if oil went down $20 or $30 a barrel I don't think there is an immediate problem. Some of the work the Awilco rigs are doing is maintenance that has to be done no matter what. For example, capping off old/shutdown wells. I don't see the price of oil going down too substantially in the next few years. Big demand from India and China...weakening of the USD...all the "easy & cheap" oil has largely been extracted... As to people selling...there are probably 1,000 different reasons. One of the big ones would be that certain funds can't have than a certain percentage in any one position. Awilco has gone up quite a bit, thus they may HAVE to sell to maintain a position. Perhaps they are nervous, and book a 75% gain is not a bad thing for them... I would not be too worried about sellers. I've been wrong before, but Awilco looks like a pretty good risk/return, even at these elevated levels. Link to comment Share on other sites More sharing options...
siddharth18 Posted October 23, 2013 Share Posted October 23, 2013 For those that bought before 2012, they indeed have been sitting on a lot of gains... http://i.imgur.com/5rSwpst.png Link to comment Share on other sites More sharing options...
Phaceliacapital Posted October 24, 2013 Share Posted October 24, 2013 This might explain some part of recent price movement: http://seekingalpha.com/article/1763212-awilco-drilling-is-the-worlds-most-undervalued-company Link to comment Share on other sites More sharing options...
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