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Geographic Diversification

In 2006, almost 50% of its revenues came from the Gulf of Mexico. Wall Street penalized the stock after the company recognized record revenues from hurricanes Rita and Katrina, which wreaked havoc on the Gulf Coast offshore drilling platforms. Investors viewed the Gulf contracts as “one-time” and deemed them to be “non-repeatable.” Investors didn’t think the company could continue its strong revenue trajectory, given its geographic concentration, and that earnings would fall into the abyss as hurricane-related business dried up. Well that’s changed quite a bit and revenues continue to grow. The Company has successfully diversified its footprint into other deepwater plays, particularly in the North Sea and West Africa. The company is expanding its footprint further in the Chinese offshore drilling market. Nearly 70% of its business today is outside the Gulf, underscoring management’s ability to diversify geographically and to realign its core growth with the most rapidly growing deepwater O&G plays.

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