{"id":27858,"date":"2012-03-01T11:17:25","date_gmt":"2012-03-01T16:17:25","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/01\/value-investing-in-europe-with-ensco-nyse-esv\/"},"modified":"2012-03-01T11:17:25","modified_gmt":"2012-03-01T16:17:25","slug":"value-investing-in-europe-with-ensco-nyse-esv","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/01\/value-investing-in-europe-with-ensco-nyse-esv\/","title":{"rendered":"Value Investing in Europe with Ensco (NYSE: ESV)"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-27791\" title=\"Amid all the doom and gloom lie some intriguing opportunities for value investing in Europe, such as the London-based oil driller, Ensco (NYSE: ESV).\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/value-investing-in-europe.jpg\" alt=\"Value Investing in Europe\" width=\"600\" height=\"178\" \/><\/p>\n<p>No one is really sold on Europe at the moment. And that\u2019s okay.<\/p>\n<p>I think European companies offer some intriguing opportunities right now. Particularly in the energy sector.<\/p>\n<p>We always stress that investors should have a portion of their portfolios allocated in international stocks. To build this, you don\u2019t necessarily want to go with more risky micro-cap companies. You want to first add strong companies with great growth prospects at a value.<\/p>\n<p>Since the start of the year, I\u2019ve written about <strong>Eni S.p.A. <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=E\" target=\"_blank\">E<\/a>) and <strong>Total S.A. <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=TOT\" target=\"_blank\">TOT<\/a>), both of which have considerably outperformed their North American counterparts <strong>Exxon Mobil<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=XOM\" target=\"_blank\">XOM<\/a>), <strong>ConocoPhillips<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=COP\" target=\"_blank\">COP<\/a>) and <strong>Chevron <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=CVX\" target=\"_blank\">CVX<\/a>) so far.<\/p>\n<p>We can all generally agree that the six survivors of the original Seven Sisters (the supermajors), Exxon, Conoco, Chevron, Total, <strong>Royal Dutch Shell<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=RDS\" target=\"_blank\">RDS<\/a>), <strong>BP plc <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=BP\" target=\"_blank\">BP<\/a>) \u2013 or the one sister that denied an invitation to the club, Eni \u2013 aren\u2019t going to earn you a quick double overnight. That\u2019s why we\u2019re always looking to buy those on dips.<\/p>\n<p>They\u2019re going to keep chugging along, spinning off <a title=\"Choosing Dividend Stocks: Six Steps For Finding These Safe, High-Yield Investments\" href=\"http:\/\/www.investmentu.com\/2010\/January\/six-steps-for-finding-dividend-stocks.html\" target=\"_blank\">dividend payments<\/a>, and they\u2019re good cornerstones to build up the energy portions of our portfolios.<\/p>\n<p>So, today, let\u2019s stick with Europe. Like Alexander Green recently wrote, there\u2019s a lot of value there. But let\u2019s talk about a company sitting below its 52-week high. It\u2019s not a supermajor, but its customer base includes five of the six supermajors. And it made some major moves last year to make it one of the largest in its industry.<\/p>\n<h2><strong>A Quick Jump From #4 to #2<\/strong><\/h2>\n<p>The lifeblood of the planet is <a title=\"Investing in Iraqi Oil\" href=\"http:\/\/www.investmentu.com\/2012\/February\/iraqi-oil.html\" target=\"_blank\">oil<\/a>. There\u2019s no way denying it. Every country needs it. Every country has to have access to it. And that means companies that develop this resource are essential.<\/p>\n<p>Last year, London-based offshore driller <strong>Ensco <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=ESV\" target=\"_blank\">ESV<\/a>) laid out $7.3 billion for industry rival, Pride International. Shares of Ensco tumbled more than 4% on the original announcement. But here we are several months later, and we can clearly see the positive impacts being made.<\/p>\n<p>In the fourth quarter, Ensco\u2019s deepwater segment revenue jumped 355%, from $113 million in 2010 to $514 million. More than 80% of that increase was due to the Pride merger.<\/p>\n<p>The same was true in its midwater segment. Almost 100% of the revenue increase in the fourth quarter for this segment was due to the addition of Pride International. That\u2019s because Ensco didn\u2019t have any midwater rigs prior to that.<\/p>\n<p>Its jack-up segment also saw nearly half of its increase in revenue due to the merger.<\/p>\n<p>We can see the move paid off.<\/p>\n<p>Ensco became the second-largest <a title=\"The Future of U.S. Offshore Oil Drilling\" href=\"http:\/\/www.investmentu.com\/2010\/May\/offshore-oil-drilling.html\" target=\"_blank\">offshore oil driller<\/a> with 74 rigs in 25 countries, including 21 ultra-deepwater and deepwater rigs. It now has the largest fleet of active premium jack-ups. And even better \u2013 especially in light of the Macondo rig disaster \u2013 it\u2019s rig fleet is now the second newest in the world, with an average age of seven years.<\/p>\n<p>More importantly, its ultra-deepwater fleet is now the most modern in the industry. And more modern rigs demand higher day rates.<\/p>\n<h2>The Shortage Driving Up Prices<\/h2>\n<p>So, 2011 was a big leap forward for Ensco. Its full-year revenue increased from $1.6 billion in 2010 to $2.84 billion\u2026 A little more than $1 billion of that total coming in the fourth quarter.<\/p>\n<p>This is all money that comes back into the pockets of investors. On Tuesday, Ensco announced it\u2019s increasing its annual dividend from $1.40 to $1.50.<\/p>\n<p>But this is really just the start. Ensco believes revenue from its <a title=\"Offshore Oil and Gas Production is Alive and Booming\" href=\"http:\/\/www.investmentu.com\/2011\/September\/offshore-oil-and-gas-production-booming.html\" target=\"_blank\">deepwater segment<\/a> alone will double in 2012.<\/p>\n<p>In the first quarter, the company had an 8% increase in revenue over the fourth quarter, with a 15% increase in its deepwater segment.<\/p>\n<p>At the end of January, Ensco announced a two-and-a-half year ultra-deepwater contract with <strong>Anadarko Petroleum<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=APC\" target=\"_blank\">APC<\/a>). The day rate for this will be $530,000 \u2013 an increase of 43% over its average deepwater day rate in the fourth quarter. Plus, it adds to its backlog of $9.7 billion.<\/p>\n<p>With oil prices high, and likely staying high into 2013, companies continue to ramp up their crude drilling programs. We\u2019re actually looking like we\u2019re in line for a rig shortage.<\/p>\n<p>Through the merger, it not only inherited Pride\u2019s rigs under construction, but Ensco has three more ultra-deepwater rigs under construction and adding two much-needed harsh environment jack-up rigs. As more companies race to drill in the North Sea fields, these harsh environment jack-ups are vital.<\/p>\n<p>In the last few years, <a title=\"The Risks of Deep Water Drilling\" href=\"http:\/\/www.investmentu.com\/2010\/July\/the-risks-of-deep-water-drilling.html\" target=\"_blank\">deepwater discoveries<\/a> have more than doubled. West Africa, South America, Indonesia, Norway\u2019s Barents Sea, Australia and the Gulf of Mexico are creating major opportunities for international oil companies. And as the price of crude remains high, offshore drillers see their own commodity \u2013 rigs \u2013 increase substantially in value.<\/p>\n<p>Good Investing,<\/p>\n<p>Matthew Carr<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=Tahm82lBNUM:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=Tahm82lBNUM:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=Tahm82lBNUM:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=Tahm82lBNUM:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=Tahm82lBNUM:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=Tahm82lBNUM:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=Tahm82lBNUM:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=Tahm82lBNUM:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/Tahm82lBNUM\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>No one is really sold on Europe at the moment. And that\u2019s okay. I think European companies offer some intriguing opportunities right now. Particularly in the energy sector. We always stress that investors should have a portion of their portfolios allocated in international stocks. To build this, you don\u2019t necessarily want to go with more &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/01\/value-investing-in-europe-with-ensco-nyse-esv\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Value Investing in Europe with Ensco (NYSE: ESV)&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-27858","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/27858","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=27858"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/27858\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=27858"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=27858"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=27858"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}