ENSCO to Cold Stack Ultra-Deepwater Rig

ENSCO 5006 semi-submersible drilling rig, image via INPEX

Feb 26 (Reuters) – Offshore driller Ensco Plc said it would shut down an ultra-deepwater rig as demand dwindles due to a slump in crude prices, a day after it slashed its quarterly dividend by 80 percent.

The company’s shares fell nearly 8 percent to their lowest in six years.

Ensco reported a fourth-quarter loss on Wednesday, compared with year-ago profit, hurt mainly by a $3 billion goodwill impairment charge.

Rival Transocean Ltd also said on Wednesday it wrote down the value of its contract drilling business by $992 million in the December quarter, and has no goodwill remaining on its balance sheet.

Ensco will shut down or cold stack a rig by mid 2015, Chief Executive Carl Trowell said on a conference call with analysts on Thursday. The move will cost the company about $12 million over the first and second quarters.

Ensco, which is looking to sell three of its rigs, said it could stack an additional rig if oil prices did not improve.

Oil prices, which fell to more than six-year lows last month, have nearly halved since their highs in June, hurt by a global supply glut and weak demand.

Ensco cut its quarterly dividend to 15 cents per share from 75 cents, mirroring an 80 percent cut in dividend by Transocean earlier this month.

The dividend cut will save Ensco about $560 million in cash annually, Evercore ISI analyst James West wrote in a note.

Ensco’s shares fell to as much as $24.51 on the New York Stock Exchange. Up to Wednesday’s close, the stock has more than halved since June. (Reporting By Shubhankar Chakravorty in Bengaluru; Editing by Saumyadeb Chakrabarty)

(c) 2015 Thomson Reuters, All Rights Reserved

Perhaps it’s this rig?

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