Atwood Oceanics Stock Jumped 10% Friday: Here's What Happened

ATW Chart

What: Offshore oil driller Atwood Oceanics, Inc. saw its stock shoot up more than 10% on Friday, Oct. 2. This is a small positive bit of news for Atwood Oceanics shareholders, who have seen the stock fall more than 40% in 2015, even after Friday's bounce:

ATW data by YCharts .

So what: As you can see from the chart above, Atwood isn't the only offshore driller that's down big so far this year. Similarly, it isn't the only offshore drilling stock to rebound strongly since last Friday. Atwood did announce a one-year contract extension on the Atwood Achiever ultra-deepwater rig late on Oct. 1, and that probably played some role in the company's big stock jump the next day. However, rising oil prices have lifted the entire offshore drilling industry over the past several market days, as you can see in the chart below:

ATW Price data by YCharts .

Now what: You can expect plenty more days like this in the weeks and months ahead, frankly. There's going to be a lot of volatility in the offshore drilling sector, and largely based on what oil prices are doing.

The catch is, from one day to the next, that volatility has absolutely nothing to do with Atwood's business, though its medium- and long-term prospects are certainly tied to oil prices rising, because that will make the kinds of oil reserves where Atwood specializes in drilling -- located in harsh environments and ultra-deepwater -- a better investment for oil companies.

But as things stand today, offshore drilling is still a mess. There are too many rigs competing for too little business, though Atwood's high-spec fleet is somewhat insulated from that. But that said, the company has a lot of its fleet coming off contract over the next year, and until it gets new contracts (or extensions like the one just announced) in place, there is some risk that there could be hard times for the company in 2016.

The good (or less bad) news for Atwood is that it's a lot less debt burdened than peers like Seadrill and Transocean , and that should give it more flexibility to maneuver the ongoing downturn in drilling. However, long-term investors need to consider that the worst may be yet to come before committing to any action with Atwood's stock just yet.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Atwood Oceanics Stock Jumped 10% Friday: Here's What Happened originally appeared on

Jason Hall owns shares of , and The Motley Fool recommends, Seadrill. The Motley Fool owns shares of and recommends Atwood Oceanics. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More