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UDRL, AAV, CPX, TESO, VTG, ATW, Oil and Gas - Drilling Stocks Overvalued

^{Published on 2011-04-18 05:31:23 - 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. UNION DRILLING INC (NASDAQ:UDRL), ADVANTAGE OIL & GAS LTD (NYSE:AAV), COMPLETE PRODUCTION SERVICES (NYSE:CPX), TESCO CORP (NASDAQ:TESO), VANTAGE DRILLING CO (AMEX:VTG), ATWOOD OCEANICS INC (NYSE:ATW) 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               
     UDRL       UNION DRILLING INC                  $11.94         $8.67          37.70% Overvalued           Oil and Gas - Drilling 
     AAV        ADVANTAGE OIL & GAS LTD             $8.55          $6.15          39.00% Overvalued           Oil and Gas - Drilling 
     CPX        COMPLETE PRODUCTION SERVICES        $29.89         $22.77         31.30% Overvalued           Oil and Gas - Drilling 
     TESO       TESCO CORP                          $19.36         $18.52         4.50% Overvalued            Oil and Gas - Drilling 
     VTG        VANTAGE DRILLING CO                 $1.90          $1.43          32.90% Overvalued           Oil and Gas - Drilling 
     ATW        ATWOOD OCEANICS INC                 $43.18         $26.91         60.50% 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.

UNION DRILLING INC (NASDAQ:UDRL) - Union Drilling, Inc. provides contract land drilling services and equipment primarily to independent natural gas producers in the United States. The company offers drilling rigs, as well as the drilling crews and ancillary equipment to operate its drilling rigs. The company provides drilling services to customers primarily engaged in developing unconventional natural gas formations. It has principal operations in the Appalachian Basin; the Arkoma Basin in eastern Oklahoma and Arkansas; and the Fort Worth Basin in northern Texas. As of December 31, 2009, it owned and operated a fleet of 71 land drilling rigs. The company was founded in 1997 and is based in Fort Worth, Texas.

ADVANTAGE OIL & GAS LTD (NYSE:AAV) - Advantage Oil & Gas Ltd. engages in the business of oil and gas exploitation, development, acquisition, and production in the provinces of Alberta and Saskatchewan, Canada. The companys principal properties include the Glacier property, the Westerose property, the Lookout Butte property, the Brazeau-Ferrier area, the Sunset/Valleyview area, and the Nevis property located in Alberta; three shallow gas properties located at Medicine Hat, Bantry, and Shouldice; a host of individual properties within the Williston Sedimentary Basin in the southeast corner of Saskatchewan; and the Wapella property. It also has interests in heavy oil properties, including the Lashburn, West Hazel, and Eyehill properties located in the heart of the Lloydminster heavy oil producing area. As of December 31, 2009, Advantage Oil & Gas proved plus probable reserves were 232.3 million barrels of oil equivalent. The company was founded in 2001 and is headquartered in Calgary, Canada.

COMPLETE PRODUCTION SERVICES (NYSE:CPX) - Complete Production Services, Inc. provides specialized services and products to develop hydrocarbon reserves for oil and gas companies primarily in North America and southeast Asia. It operates in three segments: Completion and Production Services, Drilling Services, and Product Sales. The Completion and Production Services segment establishes, maintains, and enhances the flow of oil and gas of a well. It offers intervention services, such as completion, workover, and maintenance services; downhole and wellsite services, which include wireline services, production optimization, production testing, equipment rental, and fishing and pressure testing services; and fluid handling services comprising fluid transportation, frac tank rental, and fluid disposal services. This segment also owns and operates a fleet of hot oilers and superheaters; and sells fluids used during well completions, such as fresh water and potassium chloride, and drilling mud. The Drilling Services segment provides land drilling and specialized rig logistics services in the Barnett Shale region of north Texas. The Product Sales segment offers oilfield service equipment and refurbishment of used equipment, as well as repair work and fabrication services. The company was formerly known as Integrated Production Services, Inc. and changed its name to Complete Production Services, Inc. in September 2005. Complete Production Services was founded in 2001 and is headquartered in Houston, Texas.

TESCO CORP (NASDAQ:TESO) - Tesco Corporation engages in the design, manufacture, and service delivery of technology based solutions for the upstream energy industry worldwide. It operates in three segments: Top Drive Drilling Systems, Tubular Services, and CASING DRILLING. The Top Drive Drilling Systems segment manufactures, sells, and supports top drives that are used in drilling operations to rotate the drill string. Its product line includes a range of portable and permanently installed top drive products with lifting capacities of 150 through 750 tons, both hydraulically and electrically powered. This segment also provides hydraulically powered top drive systems for rent. The Tubular Services segment offers a range of tubular handling and installation services, including the TESCO Casing Drive System plus a range of downhole tool rentals and accessories. The CASING DRILLING segment provides downhole and surface equipment on a rental basis to allow a well to be drilled with conventional oilwell casing, eliminating the use of drill pipe. The company was founded in 1986 and is headquartered in Houston, Texas.

VANTAGE DRILLING CO (AMEX:VTG) - Vantage Drilling Company provides offshore contract drilling services to multinational oil and natural gas companies, government owned oil and natural gas companies, and independent oil and natural gas producers worldwide. It involves in contracting drilling units, related equipment, and work crews to drill oil and natural gas wells, as well as offers construction supervision services. As of March 8, 2010, the companys fleet included four ultra-premium jackup rigs, three ultra-deepwater drillships, and two deepwater semisubmersibles. Vantage Drilling Company is based in Houston, Texas.

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.

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