U.K.-based drilling contractor
) has received $33 million from the sale of its two cold-stacked
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The two rigs - ENSCO 69 and Wisconsin - both built in 1976 had a
net book value of around $9 million. The pre-tax gain on the sale
is about $24 million and is likely to be reflected in the
operating results of first quarter 2014.
The divestiture of the rigs represents Ensco's continuous effort
to upgrade its fleet by selling the older, less competent assets
and reinvesting in advanced-technology rigs. The high demand for
advanced rigs positions the company advantageously as it has one
of the most capable fleet in the world.
The last few years saw an upgrade of several Ensco rigs. The
upgrade project of ENSCO DS-1 is complete while ENSCO 5005, ENSCO
5006, ENSCO DS-2, ENSCO 6001 and ENSCO 6002, are undergoing
modernization. Almost 55% of the jackups completed upgrade in
2012-2013. Fewer jackup upgrades are expected in 2014-2015. This
is, however, a positive for the company as it will improve
utilization and boost operating margins.
Over the last four years, Ensco has disposed 13 rigs and
reinvested the funds into fleet modernization. During the
same period, Ensco took delivery of 12 high-performance rigs,
namely five Samsung DP3 ultra-deepwater drillships, five ENSCO
8500 Series ultra-deepwater semisubmersibles and two ENSCO 120
Series ultra-premium harsh environment jackups. Moreover, Ensco
has six rigs under construction - three ultra-deepwater
drillships and three premium jackups - that support its
commitment to standardization.
Ensco carries a Zacks Rank #3 (Hold). Some better-ranked stocks
in the oil and gas sector include
NGL Energy Partners LP
Cheniere Energy Partners L.P.
Cabot Oil & Gas Corporation
). All these stocks hold a Zacks Rank #1 (Strong Buy).