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Pacific Drilling’s 1Q16 Earnings: What Were the Key Takeaways?

Sue Goodridge

Pacific Drilling Faces Another Hurdle to Withstand the Downturn

Revenue and EBITDA fell

Pacific Drilling’s (PACD) revenue fell 23% in fiscal 1Q16 to $205 million. It was $267 million in 4Q15. Its 1Q16 EBITDA (earnings before interest, tax, depreciation, and amortization) also fell 25% to $112 million from $149 million in 4Q15.

Earnings versus estimates

In 1Q16, Pacific Drilling’s EBITDA was 8% higher than Wall Street analysts’ estimate of $103 million. The company’s revenue was also 3.5% higher than the estimated $198 million.

Peers

The first companies in the offshore drilling (XLE) industry to release their 1Q16 results were Noble (NE) and ENSCO (ESV). Like Pacific Drilling, ENSCO’s EBITDA was also higher than analysts’ estimates. On the other hand, Noble’s EBITDA was in line with analysts’ estimates.

Stock performance

It’s important to note that 2015 was a dreadful year for offshore drilling investors. The stock price has continued to fall in 2016 for many offshore drillers. On May 9, 2016, Pacific Drilling’s stock price was down 36%—compared to its price at the beginning of 2016. ESNCO and Transocean (RIG) had returns of -34%, and -20%, respectively, for the same period. On the other hand, Diamond Offshore (DO), Rowan Companies (RDC), and Seadrill Partners (SDLP) posted positive returns of 10%, 2%, and 35%, respectively, for the same period.

What you’ll find in this series

In this series, we’ll look at Pacific Drilling’s 1Q16 results and conference call highlights. We’ll analyze the company’s current position, management’s plans for the future, and discussions between management and analysts. We’ll also analyze the company’s outlook for the offshore drilling industry.

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