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NE, ATW, PDS, RIG, PDC, PKD, Oil and Gas - Drilling Stocks Overvalued

^{Published on 2011-04-18 05:22:03 - WOPRAI}
 

April 18, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Oil and Gas - Drilling sector and these stocks are the most undervalued as of today. NOBLE CORP (NYSE:NE), ATWOOD OCEANICS INC (NYSE:ATW), PRECISION DRILLING CORP (NYSE:PDS), TRANSOCEAN LTD (NYSE:RIG), PIONEER DRILLING COMPANY (AMEX:PDC), PARKER DRILLING CO (NYSE:PKD) are all expected to go Down as they are Overvalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.

The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:

     Symbol     Company Name                        Last Close     Fair Value     Valuation                   Industry               
     NE         NOBLE CORP                          $42.77         $33.96         25.90% Overvalued           Oil and Gas - Drilling 
     ATW        ATWOOD OCEANICS INC                 $43.18         $26.91         60.50% Overvalued           Oil and Gas - Drilling 
     PDS        PRECISION DRILLING CORP             $14.59         $6.06          140.80% Overvalued          Oil and Gas - Drilling 
     RIG        TRANSOCEAN LTD                      $75.58         $46.62         62.10% Overvalued           Oil and Gas - Drilling 
     PDC        PIONEER DRILLING COMPANY            $14.95         $8.89          68.20% Overvalued           Oil and Gas - Drilling 
     PKD        PARKER DRILLING CO                  $7.12          $6.61          7.70% Overvalued            Oil and Gas - Drilling 

Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.

Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.

NOBLE CORP (NYSE:NE) - Noble Corporation provides offshore contract drilling services for the oil and gas industry worldwide. As of December 31, 2009, it operated a fleet of 62 mobile offshore drilling units, including 13 semisubmersibles, 4 dynamically positioned drillships, 43 jackups, and 2 submersibles. The company also offers labor contract drilling services, and engineering and consulting services. Noble Corporation was founded in 1921 and is based in Baar, Switzerland.

ATWOOD OCEANICS INC (NYSE:ATW) - Atwood Oceanics, Inc., together with its subsidiaries, engages in offshore drilling, and the completion of exploratory and developmental oil and gas wells. It also provides support, management, and consulting services. The company owns semisubmersible rigs, semisubmersible tender assist rigs, jack-up drilling rigs, and submersible drilling rigs. As of September 30, 2009, it operated nine offshore mobile drilling units located in offshore Southeast Asia, offshore Africa, offshore Australia, the Mediterranean Sea, and the U.S. Gulf of Mexico. The company was founded in 1968 and is headquartered in Houston, Texas.

PRECISION DRILLING CORP (NYSE:PDS) - Precision Drilling Corporation, through its subsidiaries, provides onshore drilling, well servicing, and ancillary oilfield services to the oil and gas industry primarily in Canada and the United States. It operates in two segments, Contract Drilling Services, and Completion and Production Services. The Contract Drilling Services segment provides land drilling, and camp and catering services; procures and distributes oilfield supplies; and manufactures and refurbishes drilling and service rig equipment. As of December 31, 2009, this segment operated 203 land drilling rigs in Canada, 146 land drilling rigs in the United States, 2 land drilling rigs in Mexico, and 1 land drilling rig in Chile, as well as operated 96 drilling and base camps in Canada. The Completion and Production Services segment offers service rigs for well completion and workover services, snubbing services, and wastewater treatment services, as well as involves in the rental of oilfield surface equipment, tubulars, well control equipment, and wellsite accommodations. This segment operated 200 well completion and workover service rigs; 20 snubbing units; and 78 wastewater treatment units, as well as provided approximately 11,300 oilfield rental items. The company was founded in 1951 and is based in Calgary, Canada.

TRANSOCEAN LTD (NYSE:RIG) - Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and project management services. The company also explores, develops, and produces oil and gas properties located primarily in the United States offshore Louisiana and Texas, and in the United Kingdom sector of the North Sea. As of March 31, 2010, it owned and operated 140 mobile offshore drilling units comprising 46 high-specification floaters, 26 midwater floaters, 10 high-specification jackups, 55 standard jackups, and 3 other rigs. The company was founded in 1953 and is based in Vernier, Switzerland.

PIONEER DRILLING COMPANY (AMEX:PDC) - Pioneer Drilling Co. provides contract land drilling services to oil and natural gas exploration and production companies in the U.S. The company also supplies drilling crews and ancillary equipment for operating its rigs. As of May, 2006, its rig fleet comprised 57 operating drilling rigs, of which 15 were operating in south Texas, 18 in east Texas, 7 in north Texas, 5 in western Oklahoma, and 12 in the Rocky Mountains. Pioneer Drilling, based in San Antonio, was founded in 1968.

PARKER DRILLING CO (NYSE:PKD) - Parker Drilling Company, together with its subsidiaries, provides contract drilling and drilling-related services in the United States and internationally. As of December 31, 2009, its fleet consisted of 11 rigs in the Commonwealth of Independent States/Africa-Middle East region; 10 rigs in the Americas region; 8 land rigs in the Asia Pacific region; and 13 barge drilling rigs in the inland and shallow waters of the U.S. Gulf of Mexico. The company also offers premium rental tools, including drill pipes, drill collars, tubing, high-and low-pressure blowout preventers, choke manifolds, junk and cement mills, and casing scrapers for land and offshore oil and gas drilling and workover activities. In addition, it provides non-capital intensive services, such as front end engineering and design; engineering, procurement, construction, and installation; operations and maintenance; and other project management services, such as labor, maintenance, and logistics for operators who own their own drilling rigs. Parker Drilling Company serves independent and national oil and gas companies, and integrated service providers. The company was founded in 1934 and is headquartered in Houston, Texas.

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