The Money Tree

Safely Generating Income in Retirement

Archive for June 1st, 2010

Update – ESV NP Trade

Posted by mounddweller on June 1, 2010


I need to issue a retraction regarding some of my comments in my earlier post on my new ESV trade.  Please note:

ESV has 2 deepwater rigs currently operating in the Gulf of Mexico.

This is what happens when you are in a hurry and don’t take time to verify information you’ve read elsewhere.  I read an article earlier today on SeekingAlpha that said ENSCO’s latest Fleet Status Report dated 5/14/2010 indicated that they did not have any deepwater rigs operating in the gulf.  If I had done two more minutes worth of DD I would have found that the information on SeekingAlpha was not correct.

ENSCO, in fact, has 2 deepwater rigs operating in the gulf, the ENSCO 8500 and 8501.  In addition, their newest deepwater rig, the ENSCO 8502, is currently under contract to begin operations in the gulf in August 2010.  Below is a link to the latest ENSCO Fleet Status Report dated 5/14/2010.

I apologize for any confusion this may have caused.  In addition, I want to thank one of my readers, “dealmakr”,  for bringing this to my attention.  I encourage you to read his thoughts on ENSCO.  They are posted as a comment to my original ESV post.

Finally, I’ll close by reiterating that I’m still comfortable with my ESV trade.  As I mentioned in my original post, they have a rock solid balance sheet and strong growth opportunities.  If I have the stock put to me at $30 I will not be upset.



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New NP Trade – ESV

Posted by mounddweller on June 1, 2010


Sold 3 JUN ESV $30 puts at $0.45 this morning.  ESV is a oilfield services
company.  Historically they owned/operated a fleet of jack-up rigs.  Currently
they are midway through a multi-year expansion into acquiring a deepwater fleet
of rigs.  Because of the disaster in the gulf they have been beaten down from
$51 to almost $35.  They have an excellent balance sheet and pay a small
dividend.  I anticipate they will begin increasing the dividend after they have
completed the buildout of their deepwater fleet.  They used to be headquartered
here in Dallas but recently moved to London.  Their shares now trade as ADRs.   FYI…they currently do not have any deepwater rigs operating in the gulf!  It seems to me the market has ‘thrown the baby out with the bath water’.

My $30 puts yield 1.5% and have 17% downside protection.  Ron’s PF = 2.96.  With
only 17 days to expiration, I think it is a good trade.


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