Thursday, July 24, 2014

Recent Buy - Ensco plc (ESV)

24th July 2014 I Bought 100 shares of ESV at $52.97 per share plus commission.

Ensco plc (Ensco) is a provider of offshore contract drilling services to the international oil and gas industry. As of December 31, 2011, the Company owned and operated an offshore drilling rig fleet of 77 rigs, including rigs under construction. As of December 31, 2011, its rig fleet included seven drillships, 13 dynamically positioned semisubmersible rigs, seven moored semisubmersible rigs, 49 jackup rigs and one barge rig. Its customers include national and international oil companies. On May 31, 2011, the Company completed a merger transaction (the Merger) with Pride International, Inc., (Pride), ENSCO International Incorporated, an indirect, wholly owned subsidiary and predecessor of Ensco plc (Ensco Delaware), and ENSCO Ventures LLC, an indirect, wholly owned subsidiary of Ensco plc (Merger Sub). Pursuant to the Agreement and Plan of Merger, Merger Sub merged with and into Pride, with Pride as the surviving entity and an indirect, wholly owned subsidiary of Ensco plc. In February 2014, Ensco PLC sold its two remaining cold-stacked jackup rigs.
The regions, in which the Company operates includes markets in Southeast Asia, Australia, the North Sea, Mediterranean, the United States Gulf of Mexico, Mexico and Middle East, as well as the deepwater markets in Brazil and West Africa. It provides drilling services on a day rate contract basis. Under day rate contracts, it provides a drilling rig and rig crews and receive a fixed amount per day for drilling a well. It operates in three segments: Deepwater, which consists of its drillships and semisubmersible rigs capable of drilling in water depths of 4,500 feet or greater; Midwater, which consists of its semisubmersible rigs capable of drilling in water depths of 4,499 feet or less, and Jackup, which consists of its jackup rigs capable of drilling in water depths up to 400 feet. Of the Company’s 77 rigs, 20 are located in the North and South America region (excluding Brazil), 11 are located in Brazil, nine are located in the Europe and Mediterranean region, 17 are located in the Middle East and Africa region and 20 are located in the Asia Pacific rim region.

ESV has now raised dividends for four consecutive years. Ensco now pays quarterly dividends of $0.75 per share in March, June, September and December.

ESV's earnings per share has moved steadily upward, until in 2009 it began to decline. From 2012 onwards, earnings per share have increased again. In 2009, the Ensco paid a dividend of $ 0.10 a year, and last year's $ 2.25. The dividend growth rate has been quite high, and I do not think it is going to increase as much.

Some ratings for ESV:

    Yahoo:  Mean Recommendation 3.1, 1y Target Est 53.11
    Reuters: Mean Rating 3.06
    Morningstar:  (***)

My last purchase 100 shares of ESV increases €165.99 ($223.50) of expected annual dividend net income, which increases my portfolio projected annual dividend net income to €7354.35. With purchase price $52.97 plus commission my starting yield on cost is 5.64%.

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Full Disclosure: Long ESV


  1. I like the buy, ESV has been on my radar for quite a while now and almost bought it last go around. Strong dividend makes it very tempting!

  2. I really like the buy Hawk. I have been buying shares throughout the first half of this year. The price has recently come down and I may buy some more next week. Excellent job!


  3. I like the buy DH. We own shares of ESV and bought early this year below $50. We have watched shares go above $56 and now back down to the price you just bought in. At current prices, we are definitely considering added a few more shares to our holding. We think ESV offers a nice calculated risk, with potential for both stock growth and income growth. AFFJ

  4. Great buy. I think we could see a little more weakness but that will give me a chance to add more. They are already my largest holding though so I would need a decent drop. I think shares could be a lot higher in 5 years. I have no problem waiting and collecting that juicy dividend.


  5. I better get familiar with ESV as well. These oil and gas drilling stocks seem to be good dividend payers. I was looking at Seadrill earlier, but at the end decided to wait. This was primarily due to fact that it seems that the drilling prices are going down and the market has excess capacity with better future in sight. But if these stocks get low enough, it might make sense to look at them. Did you look at Seadrill at all?

    1. Hi
      You're right, the markets will expect drilling prices to fall in the future, as new capacity is coming on. The Ensco's fleet is relatively new, however, and I believe in its ability to increase the dividend in the future more than Seadrill. Late last year I bought almost Seadrill, so I also looked a little bit into it. I could still consider Seadrill's purchase, but in the energy sector weight is already pretty high in my portfolio.

      Thanks for stopping by!