Rowan CEO sells everything he has to buy company stock:
11:12 DJS Rowan CEO Sees 2nd-Half Results Hurt By Low Demand For Rig Servic
11:12 DJS Rowan CEO Sees 2nd-Half Results Hurt By Low Demand For Rig Services
NEW YORK -(Dow Jones)- Lower demand for its oil-rig services will hurt
second-half earnings for Rowan Cos. Inc., the oil driller's chairman and chief
executive said Tuesday.
"Our average day rate and our utilization for the second half of the
year isn't going to be as good as the first," C.R. Palmer told CNBC.
For the six months ended June 30, Rowan (RDC) earned $87.1 million, or
98 cents a diluted share, on revenue of $388.2 million.
Houston-based Rowan said 15% of the company's oil rigs in the Gulf of
Mexico are inactive. If 15 to 20 vessels went back to work, however, day rates
would rise and create a "dramatic change" in the company's performance, Palmer
said.
Rowan currently has 145 rigs pumping oil in the Gulf, Palmer said.
"Anytime we have more than 160 rigs in the Gulf working, day rates go back up.
Under 150 rigs working, you see day rates go down," Palmer said.
Nevertheless, Palmer remains confident about the oil-services business.
"I sold everything I had yesterday and bought Rowan stock with it," Palmer
said.
Palmer sees oil prices going back up "and continuing to go up," which
would increase oil-producer demand for Rowan's rigs. "After all, it's our
customers who decide how many rigs we're going to work," he said.
Weak oil and gas prices have depressed oil-drilling stocks in general
recently. Rowan's shares closed at $9.50 Monday, a 25% drop since Aug. 14.
During the same period, Diamond Offshore Drilling Inc. (DO) shares have fallen
19% and Ensco International Inc. (ESV) shares have dropped 14%.
In addition to providing offshore contract drilling and aviation
services, Rowan also operates a small steel mill and owns a manufacturing
plant that produces equipment for the mining, timber and transportation
industries.
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