• Energy and Income Advisor
  • Conrads Utility Investor
  • Capitalist Times
  • Twitter
  • Seeking Alpha
  • Roger S. Conrad

IPO Analysis: Ocean Rig Partners LP (NSDQ: ORLP)

By Elliott H. Gue on Nov. 18, 2014

Offshore contract driller Ocean Rig UDW (NSDQ: ORIG) has followed SeaDrill (NYSE: SDRL) and Transocean’s (NYSE: RIG) lead and filed an initial registration statement for an MLP that will own rigs that operate under longer-term contracts.

This strategy gives the parent company the option of monetizing some of its assets at higher valuations while maintaining control over their management.

Accordingly, much of Ocean Rig Partners LP’s (NSDQ: ORLP) future upside depends on drop-down transactions from its sponsor and when its fleet’s existing contracts expire.

The prospective publicly traded partnership’s initial asset base comprises three seventh-generation drillships housed in an operating company in which Ocean Rig Partners will own an as of yet unspecified interest.

(Click table to enlarge.)ORLP Initial Asset Base

Note that the maximum average day-rate earned by the Ocean Rig Skyros will tumble to $200,000 from the fourth quarter of 2014 to the third quarter of 2015.

In Ocean Rig UDW’s third-quarter earnings call, management indicated that the timing of the MLP’s IPO “will depend on prevailing market conditions.”

We would expect this transaction to occur once the Ocean Rig Skyros has switched to its bareboat charter with its sponsor to limit the diminution of cash flow when its day-rate falls by more than half.

Energy & Income Advisor

Your complete guide to energy investing, from growth stocks to high-yielders.

In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

Subscribe today to receive a sample issue of EIA
  • Live Chat with

    Elliott and Roger on Mar. 30, 2017

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Coverage Universe

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLP Ratings

      Our assessment of every energy-related master limited partnership.

    • International Coverage Universe

      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Peter Staas

      Managing Editor: Capitalist Times and Energy & Income Advisor