Pride Int'l Remains in Neutral Zone - Analyst Blog

We remain Neutral on Pride International Inc. (PDE) shares based on our conservative outlook for midwater and deepwater dayrates. Like other deepwater players, Pride International also felt a downward pressure on utilization from newbuild capacity and weakness in the floater market. However, the company is better positioned than most of its peers as it is heavily contracted (including midwater).

Additionally, we believe the company's ultra-deepwater newbuild program and capital raising efforts will support long-term growth. The company resorts to asset purchases or additional new builds for growth. Given the recent surge in deepwater activity, we believe Pride is relatively well poised for strategic moves such as ordering new assets, acquiring assets for sale, or partaking in industry consolidation.

The company's fleet consists of 24 offshore rigs, which includes 3 ultra-deepwater drillships, 12 semi-submersibles, 7 jackups and 2 managed deepwater rigs. The company also has 3 additional ultra-deepwater drillships under construction.

Houston, Texas-based Pride International is a leading offshore contract driller with operations in many of the active oil and natural gas basins of the world, including South America, the Gulf of Mexico, West Africa, the Mediterranean Sea, the Middle East, and Asia Pacific.

Though some Gulf of Mexico spill-related glitches remain, deepwater is a compelling growth industry and Pride International is a proven leader in the space with its engineering and product management skills. We believe that the growing emergence of Pride as a deepwater contractor will aid valuation by bringing its multiples in line with other deepwater operators such as Ensco Plc (ESV) and Rowan Companies Inc. (RDC).

 
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