The Zacks Analyst Blog Highlights: Diamond Offshore, Noble, Helmerich & Payne, Independence Contract and Transocean

For Immediate Release

Chicago, IL –September 27, 2019 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Diamond Offshore Drilling, Inc. DO, Noble Corp. plc NE, Helmerich & Payne, Inc. HP, Independence Contract Drilling, Inc. ICD and Transocean Ltd. RIG.

Here are highlights from Thursday’s Analyst Blog:

Drilling Industry Continues to Suffer: Is Relief in Sight?

The drilling industry has witnessed a significant downfall in the last few quarters. With WTI Crude price struggling to stay above the $60 per barrel mark for a sustained period, drilling companies are experiencing a slow pace of recovery. This lean period forced drillers to cut costs to a bare minimum, and look for innovative ways to churn out more oil and gas. Impressively, they managed to do just that by improving drilling techniques. While this has improved profit levels to an extent, the sentiment around the industry still remains mostly negative.

Industry Performance

Let’s take a look at the price performance of the oil and gas drilling industry. In the past year, the S&P 500 Index has improved 2.3% against the oil and gas energy sector’s 23% slump. During this period, the drilling industry plunged a whopping 55.7%. Moreover, the industry currently ranks in the bottom 26% of the Zacks Industry Rank.

Headwinds Plaguing the Industry

Explorers and producers kick-started 2019 with a conservative capital budget as they witnessed massive crude downturn during the fourth quarter of 2018. Moreover, explorers are more bothered about bottom-line growth — being forced by investors following years of dull returns — than oil and gas production. Hence, conservative spending by upstream companies is likely to hurt demand for drilling services.

Environmental groups are pushing politicians to take necessary regulatory steps to reduce hydrocarbon consumption. Recently, the United States House of Representatives passed two bills, which ban new offshore oil and gas drilling in the Pacific and Atlantic coasts. Several environmental groups are lobbying the United States Senate to follow suit. Notably, in Europe, Irish Prime Minister Leo Varadkar pledged to phase out oil exploration in the country’s territorial waters.

Low oil price, triggered by a dampening global demand outlook and oversupplied market, had kept a lid on upstream projects. Especially in the offshore drilling scenario, low crude prices delayed final investment decisions for several major projects. Decreasing cost of production — attributed to operating efficiency gain — is helping the industry to recover but slowly. The situation had led to lower revenues for many offshore drillers including Diamond Offshore Drilling, Inc., Noble Corp. plc and others. While Diamond Offshore’s revenues decreased for eight consecutive years, we saw Noble Corp.’s top line decline seven times in the last decade.

Downward Estimate Revisions

Due to the reasons stated above, the drilling industry has witnessed negative earnings estimate revisions by brokers. As such, the Zacks Consensus Estimate for 2019 and 2020 has been revised downward.

Weakness in the drilling industry is haunting the companies that are part of it, including Helmerich & Payne, Inc., Independence Contract Drilling, Inc. and others. Both these companies currently have a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


The players in the drilling industry are now focusing more on cost reduction, technological improvements and efficiency gains. Major drillers are cold stacking their relatively older rigs and pushing forward high-end ones to boost margins. Companies like Transocean Ltd., given technologically advanced and versatile drilling fleet, are leading the course of the industry. Systematic and strategic plan of action can drive long-term growth for the drillers.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

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Transocean Ltd. (RIG): Free Stock Analysis Report
Helmerich & Payne, Inc. (HP): Free Stock Analysis Report
Diamond Offshore Drilling, Inc. (DO): Free Stock Analysis Report
Independence Contract Drilling, Inc. (ICD): Free Stock Analysis Report
Noble Corporation (NE): Free Stock Analysis Report
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