Shareholders of Independence Contract Drilling Inc. (NYSE: ICD) recently approved the proposal to increase the number of authorized shares that can be issued in the future. Companies issue new shares to raise funds for various programs that can range from equipment acquisition to debt repayment. That explains why expanding room to issue more shares than previously approved should help ICD overcome potential cash shortage in the future.
Authorized shares up 1.3 million
Independence Contract Drilling Inc. (NYSE: ICD)’s shareholder annual meeting held last week raised the number of authorized shares by 1.3 million to more than 4.75 million shares. The approval of the shareholders also extended the term of the authorized shares.
Independence Contract Drilling Inc. (NYSE: ICD) didn’t not reveal any plans to issue new shares in the near-term. But the new authorization helps remove some uncertainties in the business at a time when oil prices are showing signs of recovery. Many drillers trimmed their capital budgets or halted capital spending altogether following the fallout in oil prices that saw crude oil trading at new lows. But a recovery of crude price is expected to trigger increased spending by drillers, thus creating business for ICD, whose domain is onshore drilling services.
Positive Wall Street comments
Signs that great moments are ahead for Independence Contract Drilling Inc (NYSE:ICD) can be seen in how analysts are commenting on the stock. Over the past month, the company has seen positive analyst revision of its earnings estimate. As such, ICD’s consensus earnings estimate for the current quarter has improved from EPS loss of $0.12 to EPS loss of $0.11. Similarly, consensus earnings estimate for the current year has improved nearly 21% over a 30-day period to EPS loss of $0.39 from EPS loss of $0.47.
Positive industry prospects for Independence Contract Drilling Inc. (NYSE: ICD)
The story that the positive earnings revision tells is that analysts are increasingly becoming optimistic on the prospects of Independence Contract Drilling Inc. (NYSE: ICD). Perhaps that is because of the sanguine prospects in the oil market as the global supply glut eases and prices begin to recover despite OPEC’s failure to freeze output.