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Rowan Divests Cold-Stacked Rig Rowan Gorilla 1V to ADES

Zacks

Per sources, Rowan Companies plc RDC sold its jack-up drilling rig — Rowan Gorilla IV — to Middle East conglomerate Advanced Energy Systems (“ADES”).

The funds raised from the sale on Mar 6, 2018, have not been revealed. With 638 feet-long legs, Rowan Gorilla IV, is a LeTourneau Technologies Gorilla class jack-up rig design. The rig has the capability to drill to a maximum depth of 30 thousand feet.

Another rig of the company — Rowan California — has been cold stacked and is expected not to appear again in the market. However, other rigs are in good health.

Per Bassoe Offshore — a rig brokerage, advisory and project development company — Gorilla IV was valued around $4-$7 million in a cold stacked mode. When warm stacked the rig is worth $8-$13 million, while in drilling mode its worth $11-$17 million.

On completion of the sale of Rowan Gorilla IV, Rowan’s fleet will comprise 4 drillships, 20 jack-ups and 7 jack-ups in ARO Drilling, the joint venture with Saudi Aramco. The Hank Boswell and Scooter Yeargain rigs have also been included as they will be under ARO, following the completion of their current contracts in October 2018.

About ADES

ADES obtains old rigs, revamp them and bring them back to market. The purchase of Gorilla IV is in sync with this strategy. Gorilla IV was cold stacked recently after it completed the contract with Arena on Dec 29, 2017.

About Rowan Companies

The company provides international and domestic contract drilling and aviation services. It focuses mainly on high-specification, premium jack-up rigs and ultra-deepwater drillships. Over the last few years, the performance of the drilling companies has not been very impressive, considering the volatility in prices.

This is also reflected in its price chart. During the last three months, Rowan’s shares have lost 17% against the industry’s 3.2% decline.



Zacks Rank & Key Picks

Rowan carries a Zacks Rank #4 (Sell).

A few better-ranked players in the same sector are Occidental Petroleum Corp. OXY, Pioneer Natural Resources Co. PXD and ConocoPhillips COP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Occidental Petroleum is an integrated oil and gas company. The company delivered an average positive earnings surprise of 24.57% in the preceding four quarters.

Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 66.92% in the preceding four quarters.

ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. The company delivered a positive earnings surprise of 144.45% in the preceding four quarters.

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