Morningstar Rating

Stock Research and Analysis

by Jason Stevens

Bulls Say

Ensco has a younger, more highly capable fleet than many of its peers. We think this will position the company well for the eventual deep-water rebound.
Ensco's move to stack or sell old rigs is paying off, in our view. We see this as shrewd portfolio management as it reduces competition for contracts and lowers overall maintenance costs, which tend to be concentrated among older rigs.
Despite rough current market fundamentals, we expect that floater and jackup rig dayrates will recover as Brent crude prices climb. Read more 

Bears Say

A decline in day rates can have a substantial impact on Ensco. Semisubmersible day rates declined 21% from 2002 to 2004 and 70% from 1998 to 1999. Jackup day rates declined 70% from 1997 to 1999.
There are too many rigs competing for too few new rig tenders, and Ensco may need to be even more aggressive with culling its fleet to come out ahead. That could dramatically reduce the firm's future earnings power.
There are many jackups under construction, and most of them do not have a contract. The large order book could push the premium jackup market into oversupply. Read more 

Management

Carl Trowell took over as CEO and president in June 2014. Dan Rabun, who led the firm for eight years, remains as nonexecutive chairman for an unspecified period to ensure a smooth transition. Trowell joined Ensco following a long career at Schlumberger.  Read more 

Profile

Ensco owns one of the newest jackup and deep-water fleets in the contract drilling industry, which drills for oil and natural gas globally. The firm is based in London,   Read more 

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