The Awilco Drilling thesis has been generating some buzz, at least among the small contingent of value investors who can’t help but keep buying into obscure and illiquid companies. There’s a spirited debate going on over at the Corner of Berkshire and Fairfax forum and Alpha Vulture did a write up that is much more detailed than mine. I highly recommend reading it.
Amidst all the bluster, Awilco released stellar first quarter earnings.
- Revenue of $53.4 million, up 1.1% from the previous quarter.
- EBITDA of $33.9 million, up 4.0%.
- Net income of $24.7 million, up 7.9%. EPS was $0.82.
- Revenue efficiency (revenue achieved vs. maximum revenue potential) was 91.2%, down slightly due to poor weather and a stoppage for minor repairs on WilHunter.
- Net debt of $66.4 million, down substantially from last quarter’s $97.7 million.
Even better, Awilco’s management followed through on its intentions and declared a $1.00 quarterly dividend! If this quarterly dividend can be maintained (and perhaps it can, given rate increases on the horizon) then investors are looking at an incredible yield. Shares are up 10% since my original write up, but the potential yield is still in excess of 20%.
This might be the shortest post in my blog’s history, but it’s also probably the shortest I’ve ever had to wait to see an investment thesis confirmed. That’s not to say Awilco’s current successes will continue forever, but for now favorable economic conditions, the company’s great execution and the generous dividend could continue to drive shares higher.
I have a position in Awilco Drilling.
Hey all:
I got some shares today, I was surprised. I thought this would have traded higher.
Looks like somebody got 1,000 shares @ 10?
A flash crash?
I am surprised this did.nt move higher
I think the $1.00 dividend was supposed to be disbursed today. Has anyone received it yet? I own OTC shares through Fidelity.
Haven’t seen mine yet.
Worth noting: Norway’s dividend withholding is 15%.
Update: Received the dividend. Even better, withholding was only 4.2%. No idea what dividend withholding regime they’re operating in, apparently…
OTC,
After owning so many consistent dividend stocks over the years (like AMNF), I have grown accustomed to prompt payments that coincide precisely with dividend announcement press releases. Thus, I have to admit, that I checked my account about 30 times today to see if the dividend had been disbursed yet. Additionally, you are correct, I have no idea why the tax withholding was less than expected and I only hope that this does not create tax/accounting issues at the end of the year that outweigh the benefit of receiving more cash sooner.
Don’t forget about the currency issue. The additional step of converting NOK to USD may be responsible for the slight delay.
Dave,
I bought all of my AWLCF shares in the 15-17 range, and have collected 1-2 dividends on every share. At today’s current price of $25, I am really considering selling. What are your thoughts?
My cost basis is also low, but I will start to lighten up in the mid $30s. Conservatively valued, I think Awilco should trade at a yield of 12%. However, I could see investors pushing the yield down to 8% or even lower. I think that would be a mistake, as the company is essentially a slowly wasting asset.
If you just learned about AWLCF, would either of you be a buyer at current prices?
no need to answer, bought some today for my Roth. Thanx for the tip.
My apologies for not responding more quickly. I’ve been busy this week and have had little time to keep up with the blog. Just in case you’re still interested in a response, the answer is yes. I still like Awilco at these prices. I like it down to a yield of 12% or so, which would mean a share price more than 50% higher than it is now.