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Week 6: Offshore Drilling Update

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Week 6: Offshore Drilling Update PART 1 OF 2

Week 6: Offshore Drilling Stocks Fall for a 4th Consecutive Week

Stock performance

In Week 6 of 2018 (ended February 9, 2018), all offshore drilling stocks fell more than 9%, marking their fourth consecutive week of decline. Offshore drilling companies’ returns for the week ending Week 6 were as follows:

  • Transocean (RIG) fell 9.3%
  • Noble (NE) fell 13.0%
  • Diamond Offshore Drilling (DO) fell 11.4%
  • Rowan Companies (RDC) fell 10.7%
  • Ensco (ESV) fell 12.8%
  • Seadrill Partners (SDLP) fell 9.4%

The VanEck Vectors Oil Services ETF (OIH), which has a 22.3% exposure to oil and drilling stocks, fell 11.1% that week.

Week 6: Offshore Drilling Stocks Fall for a 4th Consecutive Week

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Year-to-date returns

Offshore drilling stocks started 2018 on a good note. However, this good run lasted for just two weeks. Diamond Offshore, which was the best performer in 2017 among peers, now has the worst YTD (year-to-date) return. As of February 9, 2017, Diamond Offshore’s stock price had fallen 19.9% YTD. Rowan Companies saw the second-largest decline, falling 18.2% YTD.

Rig count

The US offshore rig count stood at 16 in Week 6, unchanged from the previous week. The rig count was 21 at the same time last year.

The total US rig count, including oil and natural gas rigs, was 975 in the week ended February 9, a rise of 29 rigs from the week prior, and significantly higher than the count of 741 reported at the same time in 2017. The oil rig count was 791, 26 more rigs than in the previous week. In the next part, we’ll look at Raymond James’s and Jefferies’s revised recommendations and target prices for Diamond Offshore.

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