The offshore drilling industry continues to slowly recover, as I discussed in a number of recent reports (see: Seadrill Explains Current Offshore Drilling Market Environment, Analyzing Day Rate and Utilization Trends in the Offshore Drilling Industry – October 2017 Edition, Tracking Day Rate and Utilization Trends in the Offshore Drilling Industry – November 2017 Edition, Offshore Drilling: Future Appears Quite Bright Despite Current Weakness). With that said, the financial media continues to publish reports that largely say that the industry is never going to recover. This is in spite of the fact that the industry-wide utilization rate bottomed out in January of this year and has been increasing ever since. For the most part however, the stock market has not yet recognized that the industry recovery, if weak, is underway. As usual for this report series, I have selected six major players in the industry that should largely represent the industry's market performance as a whole over the past week. 

Transocean  

On Monday, December 11, 2017, Transocean (RIG) opened at $9.91 per share. Despite a gain on Tuesday, December 12, the stock overall declined throughout the course of the week, closing at $9.45 on Friday, December 15. This gives the stock a 4.64% loss over the week. 

Source: Fidelity Investments 

Transocean's stock also declined fairly sharply over the past two weeks. The security opened at $10.72 on Monday, December 4, 2017 and fairly consistently declined day-to-day until it reached its current price. Thus, the stock handed investors a loss of 11.85% over the two-week period. 

Source: Fidelity Investments 

By far the biggest news item over the past week regarding Transocean is the announcement that Ocean Marine, an indirect subsidiary of Transocean, is being sued by the Wilmington Trust Company. Wilmington Trust is claiming that Ocean Marine is in default of $300 million of outstanding notes due 2028. It is unclear exactly what effect this would have on Transocean as Transocean is not guaranteeing any of these notes. However, should Ocean Marine be forced to pay the entire principal amount outstanding on these notes then it could result in a default of Transocean's currently unused $3 billion credit facility. Investors may want to keep an eye on this lawsuit over the next few months. 

Ensco plc  

Ensco (ESV) stock also declined over the week ending December 15, 2017 but with slightly less volatility than Transocean. On December 11, the stock opened at $5.65 per share and closed out the week at $5.09 per share. This represents a loss of 9.91% on the week.  

Source: Fidelity Investments 

Ensco was significantly more volatile over the past two weeks, although it still declined rather sharply. On December 4, Ensco opened at $5.80 per share. This represents a two-week loss of 12.24%. This would certainly be disappointing to investors, particularly as the company's latest results were quite good. However, the market still fears the industry due to the disappointments that it delivered consistently over the past four years. 

Source: Fidelity Investments 

Ensco had no news of any significant relevance to itself. While the DS-12 rig failed to discover any oil off of the coast of Mauritania as was announced on December 14, this is more of an issue for Kosmos Energy (KOS) than for Ensco as the rig will be paid until the end of its contract term (March 2018). Thus, this announcement will have no near-term effect on Ensco. 

Noble Corp. (NE) 

When I first saw Noble's (NE) stock chart for the past week, I felt for the stockholders in the company. With the exception of a small gain on Tuesday, the stock went straight down. On December 11, Noble's stock opened at $4.12 per share. By the end of the week, the stock had lost $0.39 and closed at $3.73. This represents a loss of 9.74%.  

Source: Fidelity Investments 

This continued the decline in value that the stock suffered over the past two weeks. On December 4, the stock opened at $4.47 per share, giving it a two-week loss of 16.6%. For the most part, this was a steady decline too as there were only two days in which the stock was up on the day. 

Source: Fidelity Investments 

Noble's third quarter 2013 results were somewhat disappointing so in this case a slight investor mistrust in the company may make some sense. However, given the overall strength in the industry, it does seem likely that the stock will rebound from these levels at some point. Noble also had no notable news affecting it over the past week so it is likely that this decline was solely due to the fact that so many other drillers declined.  

Diamond Offshore  

Diamond Offshore (DO) was up slightly over the past week but it was a very small gain on a volatile week. The company's stock opened the week at $16.48 per share and climbed to a high of $17.07 per share on Tuesday before giving up nearly all of its gains and finishing off the week at $16.57. This represents a gain of 0.55% on the week. 

Source: Fidelity Investments 

Diamond Offshore was almost totally flat over the past two weeks, however it did have some significant volatility. This would make the stock quite appealing to a trader that wished to take advantage of its swings in price over the time but not quite as appealing to a buy and hold investor (although the fact that it still outperformed its peers would be appealing in and of itself). On December 4, Diamond Offshore opened at $16.58. Thus, the stock lost exactly $0.01 per share over the two-week period. 

Source: Fidelity Investment 

Diamond Offshore had no notable news over the past week. It appears that the reason for the company's continued outperformance is largely its stability and incredibly low debt load compared to many of its peers. The fact that it has Loews Corporation (L) backing it may also add some appeal. 

Rowan Companies (RDC) 

Rowan's (RDC) performance over the past week was very similar to that of its peers in that the company's shareholders saw the values of their positions decline. Rowan's stock opened the week at $14.34 and despite some early strength ended up closing down at $13.37 on Friday. This represents a loss of 6.76% on the week. This is better than what some of its peers returned as shown above. 

Source: Fidelity Investments 

As with many of its peers, Rowan's two-week performance was also nothing to write home about. On December 4, the stock opened at $15.11. It had a few days in which it posted gains but overall the stock's value largely fell. By the close of the market on December 15, 2017, the stock had posted a total decline of 11.52% 

Source: Fidelity Investments 

As with many of its peers, Rowan had no notable news affecting the stock this week. It does seem to be less followed than some of the other companies discussed here by the American financial media as well so what impact that has could be anybody's guess, but that may have an impact on its overall performance. 

Seadrill

Seadrill (SDRL) is easily the most troubled firm on this list as it is the only one currently in Chapter 11 bankruptcy. However, it is also the only company here to have posted a significant gain over the past week, which may be due to a news announcement that came out on Wednesday. Seadrill opened the week at $0.247 per share and immediately began to climb. The stock closed the week at $0.266 per share, although it was highly volatile throughout that period. This represents a gain of 7.69%. 

Source: Fidelity Investments 

The company's two-week performance was significantly worse however. On December 4, 2017, the stock opened at $0.305 and promptly fell sharply. It ended up closing out that week at just under $0.25. So, after the rebound this week, Seadrill's two-week return was a loss of 12.79%. 

Source: Fidelity Investments 

On December 12, 2017, an unofficial group of Seadrill's bondholders submitted a binding proposal related to the company's restructuring. Under the terms of this proposal, holders of Seadrill's $2.3 billion of unsecured bonds would cancel that debt in exchange for 14.3% of the reorganized firm. As I have mentioned before, it seems likely that holders of the company's stock prior to it entering bankruptcy protection would likely receive nothing in the restructured firm. Thus, the stock appears to largely be a vehicle for speculators and traders at this point.