Pride a Top Pure-Play Driller - Analyst Blog
Pride International, Inc. (PDE) reported solid third-quarter results, cautioned of near-term softness in the GoM jackup market and announced plans to divest its shallow-water Gulf of Mexico (GoM) fleet to become a pure-play deepwater driller.
Revenue and operating earnings from the company's deepwater fleet increased 37% and 60% year over year, respectively. With a $10 billion (including bonus) of backlog, Pride International offers significant earnings and cash flow visibility. We have lowered our earnings estimates to reflect a soft outlook for the GoM jackup fleet and relatively higher costs. Our new 2008 and 2009 EPS estimates are $3.62 and $4.00, down from $3.65) and $4.30, respectively.
Pride's diversified portfolio of drilling assets, both in terms of rig class as well as areas of operation, provides it with a strong leverage to the current offshore drilling cycle. We expect demand for offshore drilling assets, particularly on the deepwater side, to remain robust in the foreseeable future.
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