I wanted to get this board's thoughts on RDC. I know that the general consensus is that Offshore Drilling will the last to turn around when oil rebounds, but Rowan stock price is almost at a 20 year low and relative to its peers, in a much better financial position with no major debt payments until 2022. They are mostly a Jack Up player with solid contracts with Saudi Aramco. They also announced a JV with Aramco at the end of last year where they would supplying 4-6 JU's and then partnering with Aramco to build 20 more in Saudi.

I am considering opening a position in RDC and was wondering if I should wait some more or not do it at all.

Rowan may be a takeover candidate at some time considering their gorilla JU fleet. I would not buy any drilling contractor at this time. They are still in decline. I don't buy any stock trading below a declining 30 week moving average. All the offshore drillers need to build a base. There may be some bounces but that is what it is an over sold bounce in a bear market. Unless you want to trade on bounces I would not put money in a stock that will do nothing for years to come and pays no dividend. There are better stocks in better industries to invest in at this time.

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in a much better financial position with no major debt payments until 2022

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Well that's good because that's about when offshore comes back. Seriously though, I think they are generally a well run company and I like the fact they are more in the jackups. Low cost assets are the best.

It will be tough to see significant capex spent on offshore given investment cycles required.

Cyp0111 said:

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It will be tough to see significant capex spent on offshore given investment cycles required.

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The only thing being spent on offshore drilling around the world is commitment wells and very small developments and not all are JU type wells. Other than that essentially zero.

I did also think that Rowan was a good takeover candidate and that would have given a nice return to stockholders buying in at this level.Then with Ensco buying Atwood and Transocean selling off their JU fleet to become a specialized Deepwater player. I don't see who is left to acquire them.

My interest in RDC is mainly based on the premise that not all OSD will recover in the same way. The UDW plays in the GOM and North Sea might take 3-4 years to rebound as most assume. However some of the shallow water stuff especially in the Middle East should turn around faster. The X-factor for Rowan I believe is Saudi Aramco and their upcoming IPO and their strategy before it in the next year.

I opened a smaller position than I intended to, last week at the 10.50 level with a stop at 9.80 and hoping for a 20% return by years end.

That and which drilling contractor has any money to make an acquisition. When stock values are at lows it is difficult to use stock to purchase. Watch the Chinese (COSL) as they may be a buyer down the road if they see they are getting a deal. How is that decision RIG made to specialize in DW going for them. An over built DW semi market. They also sold off some of their older semi fleet that was for shallower waters and that was a mistake. There is a big need for shallower semis in some regions.

The problem is RDC or for that matter any of the others are making any money on the day rates they are now getting. They are just trying to survive and keep some iron working along with personnel. RDC started moving some of their gorilla fleet into the SE Asia region a few years ago and that has essentially failed now with almost zero activity.

The good thing is that some of these contractors and services are trying to base here. Maybe they will test the 50dMA. Personally I think they are in for another decline down the road once they test the 50dMA.