The industry that Pacific Drilling SA (NYSE: PACD) operates in is currently challenging and the management of the company is not hiding that fact. They say that new tender opportunities have become limited and there is pressure on existing contracts.
However, they say that all is not lost for Pacific Drilling and they even believe that they have a strategy that could generate success. The focus of the management of Pacific Drilling is on differentiation.
Because of the industry difficulties and intense competition, Pacific Drilling SA (NYSE: PACD) wants to woo clients to its side through excellent services. Toward that end, the company can be seen betting on innovation and that includes its smart-tracking approach, which the management said has helped Pacific Drilling to redefine how to warm stack a drillship.
The company is working on more innovative processes as part of the efforts to distinguish itself from the competition.
Besides innovation, Pacific Drilling SA (NYSE: PACD) also continues to drive internal efficiency. The idea is to ease pressure on margins so that it can generate improving earnings going into the future.
What transpired in 2Q?
Pacific Drilling generated revenue of $203.7 million from contract drilling activities in 2Q2016. But the figure declined from $205.4 million a year earlier. The decrease in contract drilling revenue was blamed on a high level of standby rate of the Pacific Scirocco during the quarter ended June 30.
Nevertheless, Pacific Drilling managed to a high a high revenue efficiency of 99% during the latest quarter compared to the previous quarter’s 97.7%.
Pacific Drilling SA (NYSE: PACD)’s cost-curtailment efforts are also paying off as operating expenses declined to $76 million in the latest quarter compared to $79 million in 1Q2016. CFO Paul Reese commented that daily operating expenses at Pacific Drilling have declined about 24% from their heights last seen in 2014.
Impact on Pacific Drilling SA (NYSE: PACD)’s bottom-line
The gains made on the cost controls front have had a positive impact on Pacific Drilling SA (NYSE: PACD)’s bottom-line. For the just reported 2Q2016, the company posted EPS profit of $0.39, indicating a significant improvement from EPS loss of $0.12 in 1Q2016.