Bought Awilco Drilling

After thinking some more about the risks and rewards inherent in an investment in Awilco Drilling I have decided to buy a relative small position in the stock. There are a lot of risks, but at the same time I do think it’s an asymmetric bet. It’s highly likely that a very large part of my original investment will be returned in the next three years, and while the future is uncertain there is a wide range of possible favorable outcomes. Dayrates going down to $250K/day is probably still fine, dayrates staying at the current level is great and dayrates going up is even better.

Awilco Drilling also reported the results for the first quarter of 2013 yesterday and it’s good news all around. EBITDA was up compared to the last quarter of 2012, revenue efficiency was at 91.2% (pretty good for the winter season I’d guess) and most importantly the board approved a $1.0/share dividend. At current prices that represents a 25% annualized yield, and that’s more than what I would have expected given the tendency of companies to find reasons to spend and keep cash. Also positive is that Premier Oil exercised its option to extend the term of its drilling contract with AWDR, so rates have been locked in for a longer period in 2014.

Disclosure

Long Awilco Drilling

5 thoughts on “Bought Awilco Drilling

  1. DTEJD1997

    Hello:

    Any thoughts on recent movement in Awilco? I am surprised it has not moved more…however it is still very nice!

    One thought I have is that Awilco is still largely unknown. It is not showing any yield at the Yahoo! website. My broker’s site has indicated it is paying a dividend, but only $1/share per year. It is my understanding that the $1/share will be QUARTERLY. Perhaps after the next quarter’s dividend announcement, it will start showing up on some screens and we’ll get some action?

    Any opinion?

    Reply
    1. Alpha Vulture Post author

      The $1/share is indeed going to be quarterly, although the exact payout is not yet known: that will depend on how much cash AWDR will generate. I don’t know if the fact that Yahoo or your broker doesn’t show the correct yield is a major factor explaining the current price: you have to give the market some credit for knowing the obvious. On the other hand: Bloomberg & Reuters also don’t show the implied yield, so if you are looking for yield but don’t know this company you will probably not find it. Guess we’ll see what’s going to happen when a few more dividend payments have been made.

      Reply
  2. Nat Stewart

    Looks like an interesting play. I can’t find the ticker at my broker (IB) Nothing comes up. I think DTE above is correct – Once the yield hits screens it should perk up nicely. “you have to give the market some credit for knowing the obvious” ha ha. not with this kind of stuff.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *