Pride International goes up for sale

By Corrie Driebusch and Caitlin Nish

NEW YORK (Dow Jones)–Offshore drilling companies Pride International Inc. (PDE) and former spinoff Seahawk Drilling Inc. (HAWK) have put up for-sale signs at the same time but are likely looking at different timelines in getting any potential deals done.

The Wall Street Journal reported late Tuesday that Pride is evaluating strategic options that could include a possible sale and has held discussions with Norway’s Seadrill Ltd. (SDRL) and London-based Ensco PLC (ESV), among other possible suitors. The same day Seahawk, which was spun off from Pride in August 2009, said it is looking at options to boost shareholder return, including a sale or recapitalization.

But the difference is Pride, whose largest business by revenue is deep-water drilling, has the luxury of time to weigh options, Raymond James analyst Collin Gerry said.

Seahawk, on the other hand, is burning through cash and needs a more immediate solution. The Houston-based company specializes in shallow-water drilling. Its stock has taken a beating, down 55% year-to-date, hurt by the company’s inability to receive permits for shallow-water drilling in the Gulf of Mexico following the Deepwater Horizon oil spill.

Shares of both companies spiked in early trading before the broader U.S. markets turned south. Pride was recently up 2.8% at $31.89 and earlier climbed as high as $33.42. The stock is essentially flat year to date. And Seahawk was recently off 1.5% to $9.97 but earlier rose as much as 8.2% to $10.95.

A Pride spokeswoman wasn’t immediately available to comment, while a Seahawk spokeswoman said the company doesn’t have a timeframe for completing its review and declined to comment further.

Global Hunter Securities analyst Matt Beeby said in the past, Pride has been resistant to an acquisition, so the report that it is exploring options indicates management is looking practically at the company’s businesses.

However, he cautioned Wednesday’s share gains may not hold if Pride doesn’t address a potential merger or acquisition on Thursday’s earnings call.

Beeby said Pride is particularly attractive to companies like Ensco because of its rig positioning in Brazil. The South American country is poised to become one of the biggest deep-water markets for the next several years, if not decade.

“It makes sense that [a buyer] would pay a premium for that,” he said. Pride also touts four brand new drill ships.

Seahawk, however, has less to offer as long as it doesn’t have access to permits. The company, which operates entirely in the U.S. Gulf shallow-water drilling market, has two options–selling assets or some sort of merger and acquisition, Raymond James’ Gerry said.

Beeby offered one solution: With a market capitalization of less than $120 million, “maybe some rich Wall Street guy could buy it.”

-By Corrie Driebusch and Caitlin Nish, Dow Jones Newswires; 212-416-2143; [EMAIL=""][/EMAIL];


Great… thanks for the great news Mike (insert sarcasm). The rumor from here is they are in talks with ENSCO… isn’t ENSCO the one that has no licensed marine personnel on their rigs?

In related news… it’s official that BP’s newest drillship in the Gulf Of Mexico the Deep Ocean Ascension, is being moved to Libya. Looks like I got off her just in time :wink:

And in other news, Pride, as well as other companies, being slapped with fines for FCPA violations …

[QUOTE=john;43737]Great… thanks for the great news Mike (insert sarcasm). The rumor from here is they are in talks with ENSCO… isn’t ENSCO the one that has no licensed marine personnel on their rigs[/QUOTE]

[B]IMHO[/B]…about that…believe ensco may soon be in for a rude awakening??

stock tip…an excellent stock to own…paid $3.50…now $50.00…have sell order @ $60…well maybe this year… if they buy pride…at least a split??