Aker owns and operates two ultra-deepwater platforms in the North Sea and has two more on order. The new rigs will cost $900 million. Aker’s contract backlog totals just over $1 billion, and Transocean claims that the acquisition will be “immediately accretive” to earnings.

Some consolidation has already hit the drilling business, with National Oilwell Varco, Inc.’s (NYSE: NOV) recent acquisition of a privately held floating production storage and offloading firm. Other large drillers like Seadrill Ltd. (NYSE: SDRL) and Diamond Offshore Drilling, Inc. (NYSE: DO) may also be on the lookout for expansion. Possible targets include Precision Drilling Corp. (NYSE: PDS), with a market cap of around $4 billion is half the size of Diamond and about a third the size of Precision. Cal-Dive International Inc. (NYSE: DVR) with a market cap of about $292 billion could be an even more appealing target.

Other possible targets include Hercules Offshore, Inc. (NASDAQ: HERO) with a market cap of about $540 million, Vantage Drilling Co. (AMEX: VTG) with a market cap of about $420 million, Parker Drilling Co. (NYSE: PKD) with a market cap of about $700 million, and Pioneer Drilling Co. (NYSE: PDC) with a market cap of $720 million.

Precision Drilling’s trailing P/E ratio has fallen from around 58 in April to around 27 today. It’s forward P/E is down from 13.57 to 10.92 since we put the company on our list of energy value stocks.  The company operates onshore in North America and internationally, so it was largely unaffected by the moratorium in the Gulf of Mexico. Precision’s shares are up nearly 3.5% after about an hour of trading, to $14.69, in a 52-week range of $6.02-$18.18.

Cal Dive cannot put up a positive trailing P/E, and it’s forward P/E is just 7.74. It’s price/book ratio is 0.77. The company was hit by the Gulf drilling moratorium, and its business — putting real people deep underwater — is not filled with competitors. Unfortunately, many of the newest offshore fields are too deep for the company’s divers. Still, this could be a growing business offshore of Africa. Cal Dive’s shares are up more than 4.5%, to $3.13, in a 52-week range of $2.97-$8.19.

Hercules Offshore has even more troubles, with no trailing P/E and no positive forward P/E either. The price/book ratio is a mere 0.54. Revenue rose in the most recent quarter, and the company said dayrates were rising as demand increased in the US Gulf of Mexico. Hercules shares are up more than 7.5%, to $3.99, in a 52-week range of $2.05-$6.99.

Vantage Drilling’s numbers look about equal to Hercules’s. No positive P/E either trailing or forward, and a price/book ratio of 0.57. The company’s problem is long-term debt, which last quarter cost Vantage more than $25 million. Vantage shares are up more than 5.75%, to $1.47, in a 52-week range of $0.97-$2.26.

Parker Drilling’s trailing P/E is a nosebleed-level 143.84, and its forward P/E is 9.10. The stock’s price/book ration is 1.10. The company beat analysts’ expectation for earnings in the second quarter and is expected to earn $0.12/share in the current quarter, compared with just $0.01 last year. Parker’s drilling activities are either onshore or in shallow offshore waters. Parker shares are up more than 6%, to $6.11, in a 52-week range of $3.58-$7.45.

Pioneer Drilling is another onshore driller with a non-existent trailing P/E, but a forward P/E of 15.32. The price/book ratio is 1.74. Pioneer’s shares are up nearly 4%, to $13.34, in a 52-week range of $5.23-$18.00.

Paul Ausick

Just this week we featured Exxon Mobil Corporation (NYSE: XOM) as being a solid value stock pick based upon peers set to benefit from this year;s driving trends, but the focus today is on an expansive list of energy companies.  These companies have fairly low forward P/E ratios that could belie their true value and there are generally other driving factors as well. SOme picks will seem controversial on the surface but that is what the explanations are for in the analysis.

Carrizo Oil & Gas Inc. (NASDAQ: CRZO) explores for oil and gas primarily in the US, but also has a stake in North Sea exploration. The company’s primary holdings are in the Barnett shale, the Marcellus shale, and the Eagle Ford shale. The company’s trailing P/E ratio is negative, and its forward P/E is a meagre 7.87. It’s solid position in the Eagle Ford, a liquids-rich play, argues for a higher valuation.

Kodiak Oil & Gas Corp. (AMEX: KOG), like Carrizo, has holdings in some of the most liquids-rich gas plays in the US, with a particularly strong position in the Williston Basin’s Bakken shale. The company’s trailing P/E ratio, like Carrizo’s, is negative and its forward P/E is 8.04. And again like Carrizo, Kodiak needs to face rising cost issues. The break-even Nymex price for natural gas is more than $4.40/thousand cubic feet, but liquids-rich plays like the Eagle Ford and the Bakken practically assure solid returns, provided costs can be kept under control.

Harvest Natural Resources Inc. (NYSE: HNR) is a more global explorer for oil and gas, and does have exposure in Venezuela, which is probably why its trailing P/E ratio is negative and its forward P/E is 8.20. Investor George Soros more than doubled his stake in Harvest during the first quarter of 2011.

Clayton Williams Energy Inc. (NASDAQ: CWEI) is an oil and gas explorer that operates mainly in Louisiana and Texas. The company’s trailing P/E is 75 and its forward P/E is 8.16. The company reduced its guidance following a poor quarter where results were hit by rising costs. What makes the company a reasonable value at its current price is its heavy weighting toward oil production, which accounts for nearly 75% of its total production. Liquids are where the money is.

Petrohawk Energy Corp. (NYSE: HK) is another significant player in the Eagle Ford shale play in south Texas. The company’s P/E ratio is a blinding 252.31, while its forward P/E is 15.81. That’s still a little rich, but Petrohawk is very focused on liquids, it holds more than 330,000 net acres in the Eagle Ford play, and, maybe best of all, with a market cap of around $8 billion it could be a takeover target for one of the big oil guys.

Precision Drilling Corp. (NYSE: PDS) is an onshore drilling company that focuses on North American services. The company’s trailing P/E is a robust 58.05 and its forward P/E is 13.27. Drillers, particularly onshore drillers not affected by the moratorium in the Gulf of Mexico, have done well this year. Precision has boosted its rig utilization rate so far this year and expects to bring another dozen rigs online in 2011, with 11 going to Canada.

Cal Dive International, Inc. (NYSE: DVR) just posted dismal earnings for the first quarter. It’s trailing P/E is negative and its forward P/E is 13.27. The company has been hit by the moratorium on Gulf drilling, but it provides underwater services that are not widely available and, thus, the company has surprisingly strong pricing power. Once drilling starts up again, Cal Dive ought to perform a lot better.

An ending with a driving season note, have a great holiday weekend.

Paul Ausick

It would be easy to say that Microsoft is too late to the smart-TV market as it was too late to the multimedia player business with its Zune or to the smartphone market with Windows 7′s mobile OS.

Microsoft has many advantages that make it probable it will be a formidable opponent in an American family room that cannot physically accommodate all the consumer electronics devices that wired households can buy and use.

Microsoft’s success with the Xbox line of video game consoles shows what expensive R&D, a nearly unlimited marketing budget, and the tenacity of Microsoft management, which has often been wasted on failed efforts, can do in the electronics industry. It had no business competing with market leader Sony (NASDAQ: SNE) or the devices sold by Nintendo. Microsoft came into an industry with established leaders and engineered and advertised its way to the top.

Microsoft has shown equal tenacity in the search engine business, another example of its resolve to enter and attack markets against high odds.

Microsoft’s other advantage in the family room is that it is already there in many cases. The PC  is still the most widely used electronics utility in the home along with the TV. Americans have already begun to tether the two together. Microsoft may be the company that finally helps strengthen the link between the two machines. That has been the Holy Grail of the consumer electronics field for more than a decade. Tens of billions of dollars have been spent by companies that want to own the PC/TV nexus. There are many more losers than winners by far in that race.

Microsoft’s size and brand often work to its disadvantage. Those things and its ubiquity in the home may be what allows Redmond to win a war is has tried to win for years.

Douglas A. McIntyre

Franklin Street Properties Corp. (NYSE: FSP) is trading down by about 10 after its 8 million share secondary offering priced at $13.00 through Robert W. Baird.  This is after closing at $14.76 yesterday and was increased from a previously announced offering size of 6,000,000 shares. The use of proceeds will be for the repayment of outstanding debt.

Huntington Bancshares Incorporated (NASDAQ: HBAN) was supposed to sell 78 million shares oif common stock in a public secondary offering, but the size was bumped up.  It sold 95.2 million shares of its common stock at $4.20 per shares  a price to the public of $4.20 per share after closing at $4.51 Thursday.  Goldman Sachs is the book-running manager and Sandler O’Neill & Partners, L.P. is co-manager.

Mueller Water Products, Inc. (NYSE: MWA) is trading up after it priced a 32.28 million share secondary offering of common stock at $4.75 through BofA Merrill Lynch and Goldman Sachs.  The original amount of shares was to be 27.5 million shares and gross proceeds is to be used to purchase additional shares and to repay a portion of indebtedness outstanding under its credit agreement.

Navios Maritime Partners L.P. (NYSE: NMM) priced its 2,800,000 common units public offering of limited partnership interests at $12.21 per unit, down from a $13.06 closing price on Thursday. Navios Partners expects to use the proceeds to fund its fleet expansion and for general partnership purposes.  Joint book running managers for this offering are Citi and J.P. Morgan, while co-managers are listed as S. Goldman Advisors LLC, DVB Capital Markets, and Cantor Fitzgerald.  Shares are down 9% at $11.85 and the market cap here is listed as $293 million after the drop and before the effects of this offering.

SmartHeat Inc. (NASDAQ: HEAT) sold 7,246,087 shares of common stock at $9.00 per share after closing at $10.06 yesterday.  The size of the offering was increased from 5,000,000 shares based on strong demand and it granted the underwriters an over-allotment option to purchase 1,086,913 additional shares of common stock.  William Blair is the sole book-running manager and BMO Capital Markets is co-lead manager.  This is an interesting and under-followed company in China’s clean technology, energy savings industry as it makes standard plate heat exchangers, custom plate heat exchanger units and heat meters.  They must like it a lot because shares are up 13% at $11.44 on almost 2 million shares right after the open.  This even hit a 52-week high of $11.59 this morning.

Sonic Automotive Corp. (NYSE: SAH) priced two offerings, one debt and one stock.  It is selling 9 million shares at $10.10 through J.P. Morgan and BofA Merrill Lynch.  It is concurrently selling $150,000,000 aggregate principal amount of convertible senior notes due October 1, 2029.  The total gross proceeds from the offerings will be approximately $240.9 million and its current market cap before the effect of the offering is listed as $421 million.  Interestingly enough, Sonic Automotive is up almost 3% at $10.45 this morning.

SXC Health Solutions (NASDAQ: SXCI) sold 4,500,000 shares of common stock in a public secondary offering that priced at $41.50 per share.  This deal was sold through J.P. Morgan, Dougherty, SunTrust Robinson Humphrey, and Versant, and the offering size was originally supposed to only be 3.5 million shares.  The $176 million in gross proceeds is earmarked for general corporate purposes.  Its market cap before this offering was listed as $1 billion, but shares are up 5% at $43.87 and the 52-week high is $44.67.

VIVUS Inc. (NASDAQ: VVUS) is trading up after it priced a 9,000,000 share public secondary offering at $10.50 through J.P. Morgan, and JMP Securities, Lazard Capital Markets, and Merriman Curhan Ford are acting as co-managers.  Based upon the rise seen already, we expect that the 30-day overallotment option to purchase up to  1,350,000 shares will be exercised.  Shares are up 8% at $11.45 and this gives more R&D and launch capital for its obesity drug that is expected to be approved in 2010.

We have also seen a filing out of Bruker Corporation (NASDAQ: BRKR) for a proposed public secondary offering of 12,000,000 shares of common stock being sold by two members of the Laukien family not involved in the company’s business.  Goldman Sachs, J.P. Morgan, and Deutsche Bank are listed as joint book-running managers.

This is not even the full tally as there are several much smaller deals on the books as well.  Today’s deals that priced came to a total of right at $1.475 billion, and that is before the effects of any over-allotments.

You can join our open email distribution list which goes out several times per week for updates on IPO’s and key secondary offerings, top analyst upgrades and downgrades, top day trader alerts, guru investor data on Buffett and others, mergers, and more.

JON C. OGG
September 18, 2009

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) had good news but is trading lower as VIVUS Inc. (NASDAQ: VVUS) looks better.

Cal Dive International Inc. (NYSE: DVR) is trading 3% lower on a seondary offering of shares that is being sold by Helix Energy Solutions Group, Inc. (NYSE: HLX).

E*TRADE Financial Corporation (NASDAQ: ETFC) is trading up sharply at the expense of Charles Schwab (NASDAQ: SCHW) after a Goldman Sachs analyst call.

Mueller Water Products (NYSE: MWA) is actually trading up after its secondary offering size was increased on strong demand from a large underwriting group.

Palm Inc. (NASDAQ: PALM) is trading down marginally, but is seems like its direction is not clear yet.  We have more details on levels to watch for support and resistance.

You can join our open email distribution list which goes out several times per week for top day trader alerts, analyst upgrades and downgrades, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.

Jon C. Ogg
September 18, 2009

The bump in revenue and profit is the result of Cal Dive’s acquisitionof Horizon Offshore in late 2007. So that deal, at least, paid off forinvestors.

The share price is up nearly 9.5% in early trading, to$7.15. That’s still more than 50% lower than Cal Dive’s 52-week high.  With a 52-week low of $5.51, it looks like at least the worst has been priced into shares at current levels.

Paul Ausick
October 30, 2008

Transocean Inc. (NYSE: RIG) has given back nearly one-quarter of its value from its highs.  The worst performer among the larger players was CalDive (NYSE:DVR), down 43% from its 52-week high. Precision Drilling Trust (NYSE:PDS) is down about 30%, Weatherford (NYSE:WFT) is off about 27%, and National Oilwell Varco (NYSE:NOV) and BJ Services (NYSE:BJS) are down about 25%. A host of others are off around 20%: Baker Hughes (NYSE:BHI) at 22%; Basic Services (NYSE:BAS) at 21%; Halliburton (NYSE:HAL) at 20%; and Schlumberger (NYSE:SLB) and Smith International (NYSE:SII) are off about 19%.

That 20% number is pretty well reflected in the stock price declines among the majorintegrated oil companies. One might conclude that big oil sets the pacefor the services companies. But is that really the case?  Ken Heebner’s CGM FOCUS FUND has also stuck with the service companies.

Transocean’s forward P/E ratio is 7.81, against its current P/E of8.25. The company’s 5-year PEG ratio is 0.42. CalDive, the worstperformer, has a forward P/E of 7.46, compared with its current P/E of12.16, and a 5-year PEG ratio of 0.31. The largest companies in thesector, Schlumberger and Halliburton, have 5-year PEG ratios of rightaround 1. The smaller companies are expected to grow more than thelarger ones.

One interpretation of this is that it’s easier for smaller companies togrow than it is for large companies. Schlumberger, with a market cap ofabout $110 billion, needs large projects to make an impact on itsperformance. CalDive can get by with smaller projects. Is there anotherNorth Sea discovery on the horizon? Or an Alaska North Slope? With theexception of the large discoveries offshore Brazil, the answer is "No."Smaller projects, such as recompletions and workovers onshore in theUS, look to be where the action is for production companies. There andin the Gulf of Mexico, where Transocean is the sector’s largest player.Overall, the outlook for oilfield services is strong if the industrycan control costs and investors can be patient.

Right now drilling and day rate prices are very high whether or not oil trades back near $150 as Goldman Sachs reiterated today or if prices go back under$100.00.  You can also see how the services sector performed much better than the pipeline sector.  You can also see how the refiners have fared out the worst of the sector.

Paul Ausick
August 20, 2008

• Cal Dive International (NYSE: DVR) Raised To Overweight at JP Morgan.
• Genomic Health (NASDAQ: GHDX) Cut To Neutral at JP Morgan.
• KLA-Tencor (NASDAQ: KLAC) cut to Underperform at Oppenheimer.
• Kroger (NYSE: KR) cut to Underweight at at JPMorgan.
• Liberty Capital (NASDAQ: LCAPA) cut to Hold at Deutsche Bank.
• Lowe’s (NYSE: LOW) cut to Underperform at Morgan Keegan.
• Nokia (NYSE: NOK) raised to Outperform at Oppenheimer.
• Permian Basin (NYSE: PBT) cut to Hold at Citigroup.
• Thornburg Mortgage (NYSE: TMA) Raised to Peer Perform at Bear Stearns.
• UBS (NYSE: UBS) cut to Underperform at KBW.

Jon C. Ogg
March 12, 2008

• Approach Resources (AREX) started as Overweight at J.P.Morgan.
• Atwood Oceanics (ATW) raised to Buy at Banc of America.
• Cal Drive (DVR) started as Buy at Banc of America.
• Diamond Offshore (DO) started as Buy at Banc of America.
• Ensco (ESV) started as Neutral at Banc of America.
• Grant Prideco (GRP) downgraded to Hold at Citigroup.
• Gulfmark Offshore (GLF) raised to Buy at Banc of America.
• Hornbeck Offshore (HOS) started as Buy at Banc of America.
• Noble Energy (NE) started as Buy at Banc of America.
• Occidental Petroleum (OXY) raised to Market Perform at FBR.
• Pride International (PDE) started as neutral at Banc of America.
• Transocean (RIG) started as Buy at Banc of America; Jim Cramer also noted this one as being one of his top 5-year stocks with earnings visibility.

Jon C. Ogg
December 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.