Pride Int'l (IL/A): Uninspiring 2Q EPS, but outlook solid
Goldman Sachs August 01, 2005
PDE recurring 2Q05 EPS of $0.12 was below our estimate + consensus of $0.13 due to (1) higher W. Hemisphere opex (-$0.02), (2) higher LAM Land exp (- $0.01) offset by higher E. Hemisphere op income (+0.01). We are lowering our 2005E EPS to $0.67 from $0.71 due to lower W. Hemisphere rig utilization (planned downtime), but raising our 2006-07 EPS to $1.68/$2.30 from $1.49/$1.95 as the fundamental outlook for land + offshore drilling mkts continues to improve. We are also raising our fair value estimate to $31 (8.5x 2006E EBITDA) from $29 = 17% upside potential, though we maintain our IL/A rating, seeing greater upside potential in RIG + DO and potential that PDE absorbs short-term dilution (i.e., divestiture of L. America land) in the interest of enhancing longer term returns via greater exposure to deepwater (i.e. potential acquisition of 70% of newly built semisubmersibles in Brazil that PDE doesn't already own).
KEY DRIVERS OF ESTIMATE REVISION.
Key drivers to our 2005 estimate change include: reduced Western Hemisphere utilization assumptions (-$0.08) offset by reduced interest/other expense (+$0.05). Key drivers to 2006 estimate change include: (1) increased jackup dayrate assumptions (+0.02), (2) increased deepwater dayrate assumptions (+$0.02) and increased land rig operating income assumptions (+0.15). Change to 2007 estimates driven primarily by increased jackup and floating rig dayrate assumptions.
Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Terry Darling, Jason Gilbert. |
