Pacific Drilling Not Looking to Sell Itself, CEO Says

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Pacific Drilling SA, the deepwater oil driller controlled by Israeli billionaire Idan Ofer, said it’s not looking to sell itself despite gaining notice as a takeover candidate during an oil-market crash.

The $442 million company, which has lost almost 80 percent of its value since oil prices began falling in June 2014, owns a fleet of seven ultra-deepwater drillships with five of them under contract and an eighth being built. Rig owners around the world are suffering as new vessels enter the market even as customers cut activity to survive a yearlong crude downturn.

The company, which is based in Luxembourg and operates out of Houston, has attracted interest from larger rivals such as Ensco Plc, Transocean Ltd. and Seadrill Ltd. since the start of last year, a person familiar with the matter said in June. Pacific kept pace on Thursday with most of its rivals who beat earnings estimates in the second quarter with better-than-expected revenue.

“We’re not at all surprised that there would be market rumors that we are a takeover target,” Chief Executive Officer Chris Beckett said Thursday in a phone interview. “But that doesn’t mean that in any way we have a plan to be taken over or a desire to be taken over.”

Pacific Drilling is “ideally placed” to steer itself through the downturn with its high-specification rigs and capital discipline, Ron Moskovitz, chief executive officer at Ofer’s holding company, Quantum Pacific, said Friday in an e-mailed statement.

‘Full Confidence’

“We have backed Pacific Drilling since its inception and have full confidence in the business, its strategy and management,” Moskovitz said in the statement. “Offshore drilling is a core sector for us.”

Pacific reported second quarter per-share profit of 22 cents, beating by 4 cents the average of analyst estimates compiled by Bloomberg. Revenue was $274 million, up 5 percent from a year earlier. That’s higher than the $269 million average of 15 analysts’ estimates compiled by Bloomberg.

Pacific, which has 11 buy ratings from analysts, nine holds and four sells, fell 7.7 percent to $2.05 at the close in New York, after earlier being up as much as 11 percent.

Pacific doesn’t expect its two parked vessels to return to work this year, Beckett said. Its last rig under construction is set to leave the shipyard in October without a contract. In addition, Pacific is talking with Chevron Corp. about finding more work for its drillship operating in Nigeria that’s scheduled to end its contract in January.

Key Concern

The inability to secure work for rigs remains a concern for Pacific, J.B. Lowe, an analyst at Cowen & Co., wrote Thursday in a note to investors.

“Without new contracts, three of the company’s seven active rigs could be idle within six months,” according to the note.

Being rolled into a larger competitor could hurt its value to customers, Beckett said. The company, which plans to someday grow to as many as 12 rigs, was started in 2011 with the intention of keeping a small and sophisticated fleet.

“A sale doesn’t make sense to us at this point,” he said. “The board and the lead shareholder are fully aligned with us on that view point.”

(Pacific Drilling is scheduled to hold an earnings conference call at 10 a.m. New York time on Friday, accessible at http://www.pacificdrilling.com.)

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