Atwood Oceanics (NYSE:ATW) is a global offshore drilling contractor based in Houston. It is engaged in the business of leasing its rigs to oil companies, who then drill the oil out of the ground. Atwood has a fleet of 13 modern rigs, employed in a wide range of areas around the world. Recently Atwood’s stock has been hammered due to the tailspin of oil prices and the general uncertainty related to the oil market. This might present a good opportunity for value-oriented investors.
The industry in which Atwood operates, is dominated by risks the individual company has no control over, such as oil prices. However, what Atwood has done, as opposed to its competitors, is to lock in long-term contracts when the oil price was high. Therefore it can benefit from a stable source of income, even as the oil price hits daily lows, and the competition struggles. Furthermore, it has a wide range of clients, which means it has mitigated the risk of relying too heavily on one customer. Continue Reading »