Sunday, April 27, 2014

April Bonus Buy

After my Seadrill purchase I have been analyzing many other offshore drilling companies.  The sector has recently been beat up over fears that major oil companies are pulling back on ocean drilling operations.  After heavily researching the major players in this sector I have narrowed my search down to 4 target companies that I added to my watch list.  Earlier in this month I pulled the trigger on one of these companies picking up shares of Seadrill.  I still consider this sector a risky play however I also see great potential upside.  On Monday I made another purchase after delving through financials picking up 45 shares of Awilco drilling (AWLCF).

Awilco is a much smaller company than Seadrill operating two semi submersible drilling rigs.  The company operates out of the UK and trades on the Norwegian stock exchange.  Awilco chooses to pay out the majority of its profits in dividends currently paying out a 20.16% yield at the time of this writing.  With just two rigs, Awilco is a very risky play because damage caused by inclement weather or an accident could set back their profits in a big way.  Furthermore Awilco has scheduled maintenance on both of their rigs in 2016 which will put them each out of service for two months for upgrades (having worked in a shipyard I know how these things can drag out past the planned two months.)  With cash on hand, and the rigs contracted out for many years to come for increasing dayrates, Awilco should see a nice boost in profit next year.

With this purchase my forward yearly dividend has increased from $741.77 to  $939.77.  My portfolio has been updated to reflect this change.  Do not be surprised if I buy two more drillers for my next purchases, and remember that I am extremely tolerant to risk. Remember to read my disclaimer before following me in any stock purchases.

Disclaimer:  Long SDRL, AWLCF


  1. Definitely seems a bit risky compared to some of the larger drillers, but with risk comes reward...hopefully. A 20% yield is pretty amazing. If they can at least maintain their dividend for 5 years you'll be playing with house money.

    Are there any extra commissions for buying them since they're on the Norweigian stock exchange?

    1. TDAmeritrade charges a 15 dollar fee for trading foreign securities, something I became aware of after the transaction... doh. Oversight on my part as trade fees will take a bigger chunk out of this investment than I would like. This is easily the highest risk investment in my portfolio, it's a bit of an investment and an experiment. I am excited to see where this one goes.