In a continuous endeavor to invest in its growing fleet of ultra-deepwater semisubmersibles, Ensco International plc (ESV) has recently sold two jackup drilling rigs for approximately $95 million. The two rigs in question are Ensco 50 and Ensco 51.
As of December 31, 2009, the total net book value of these rigs was approximately $63 million. Ensco has a long history of upgrading its fleet by investing in newer equipment and divesting older assets.
Following the sale, Ensco’s drilling fleet will consist of 40 jackup rigs, 4 ultra-deepwater semi-submersible rigs (Ensco 7500, Ensco 8500, Ensco 8501 and Ensco 8502) and 1 barge rig. Additionally, the company has 4 ultra-deepwater semi-submersible rigs (Ensco 8500 series) under construction.
The financial discipline followed by Ensco for many years has made it one of the best capitalized companies in the industry. The company’s deepwater expansion strategy is beginning to pay off in a major way. Ensco reported better-than-expected fourth quarter results, driven primarily by the improving performance of its Deepwater segment.
Given the signs of improvement in demand for high-specification jackups and Ensco’s fleet composition, we have a bullish view for the company. Additionally, Ensco’s ultra-deepwater newbuilds, which are slated to enter the market in the near future, will positively impact the bottom line and improve investor sentiment as well. We are currently Neutral on Ensco shares.
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