Market value(06.02.2008): $7.46 billion(share price $28.48)
P/E: 4.87
P/B: 1.42
Yield: 0.56%($0.04/Q)
Revenues: 2008: $3,446 million 2007: $2,995 million 2006: $2,100 million 2005: $1,382 million 2004: $1,066 million
Operating margin 2008: 55.4% 2007: 49.8% 2006:44% 2005: 27% 2004: 18.5%
EPS 2008: $5.86 2007: $4.48 2006: $2.67 2005: $1.08 2004: $0.55
Balance sheet at 31.12.2008
Assets
Current $1.240 billion
Total $7.102 billion
Liabilities
Current $0.680 billion
Total $1.817 billion
Backlog at 31.12.2008: $11.5 billion, 31.12.2007: $6.7 billion
Fleet: 3 drillships (avg. age:28 years, all deep water units), 14 semi-submersibles(6 ultra deep water units), 43 jackups 3 submersibles.
Average rig utilization: 2008: 2007: 95% 2006: 96% 2005: 96% 2004: 85%
Competition(mcap): Transocean($19.06 billion), Diamond Offshore Drilling($9.38 billion), Seadrill($3.64), Pride International($3.23 billion), Ensco($4.06 billion), Rowan Companies($1.60 billion)
Customers(significant): Pemex, Shell, Petrobras, Chevron, Gaz de France, ExxonMobil
Acquisition/divestments: 2008: Sale of platform driling business value:$35 million
Shareholders: Barclays Global Investors UK 7.44%, FMR LLC 5.41, WENTWORTH, HAUSER AND VIOLICH 5.15%, VANGUARD GROUP 4.56%, STATE STREET 3.75%
Notes: Don't like the dividend policy, the company could and should pay a much greater portion of its profits directly to the owners. A real dividend instead of a token one would increase the valuation of the company by 10-30%.
The fleet is ageing and will require increasing capex. The relationships with national oil companies(Pemex, ONGC, QatarGas) can be a competitive advantage in the future as the newbuilds increase supply of rigs. The operating margin is at an unsustainable high, but I don't expect it to drop significantly before the end of this year. Fleet utilization is likely to fall aswell.
Overall NE looks cheapish(P/E, P/B, balance sheet, backlog).
Energy Current: Seasonal, economic factors affect offshore rig day rates
4 comments:
Is Stone Energy Corporation (NSE:SGY) familiar to you? I recently examined their business/balance sheet and im somewhat convinced. What you think about Stone Energy Corp?
I'm not familiar with company, but I took a quick look. Some observations: Production costs seem somewhat high: For the 9 months ending in September Stone had $6.90(including $2.26 lease operating expenses) of expenses per Mcfe, the number for the same period in 2007 was $6.19(including $2.11 lease operating expenses). For comparison the same figures for Cheasapeak Energy(NYSE:CHK) 9M/08: $4.86, 9M/07:$4.87 and Apache(NYSE:APA) 9M/08:$5.20, 9M/07:$4.23. Natural gas is currently trading around $4.5 per Mcf. It looks like that without hedging Stone is losing money on todays commodity prices.
According to the Q3 report SGY has hedged 60 000 MMBTUs of its daily natural gas production and 5000 bbls of its oil production through collars and fixed-price swaps. That's about 90 000 MMcfe/d, the production guidance for 2009 is ~300 MMcfe so ~30% of the 2009 production is hedged between 8-9 dollars per Mcfe. The hedging position isn't great, but it could be worse. http://www.forbes.com/2009/02/07/linn-energy-futures-business-energy_0209_oil_hedges.html?partner=yahootix
Deep water: SGY is a participant in 50 deep water blocks. Deep water exploration and production is much more expensive than shallow water or onshore e&p, thus deep water is usually out of the reach of smaller companies like SGY.
There is a lot debt on the balance sheet, but it seems manageable at the moment, however without Oil/natural gas price gains I would expect the company to sell some of its assets by end this year.
A rough low case liquidation value estimate: Proven+Probable reserves multiplied by a basket commodity price that reflects the company's reserves (~60% natural gas,~40% oil) deducted with operating expenses, minus total liabilities. The energy content of one barrel of oil= 6000 cubic of natural gas. Commodity prices on Friday: natural gas ~$4.50, oil ~$40. Total liabilities on 30/09/08 $2223 million.
519 million Mcfe+398 million Mcfe x(($4.50 x 0.60+(($40 x 0.40):6))-$2.26)-$2223 million= $628 million.
SGYs market value on Friday was $297 million, so based on that very rough(possibly completely inaccurate) estimate there might significant upside potential in the company. I'll have to take a closer look.
What got you interested in SGY?
Oh and my apologies for the late reply!
Im also a bit intrested about SGY because they made quite good results even though huge impact of hurricanes and other difficulties they had.
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