I’ve been following Independence Contract Drilling (ICD) for sometime now. I almost took a position in the stock years ago before they acquired Sidewinder. These were the days when drilling rates were in the mid 20s. Then the energy market fell apart and the stock almost died.
Today I continue to follow Independence because the company fascinates me. I don’t think I will ever take a position in the stock given the convertible debentures outstanding that could potentially increase the share count to infinity (not really but close). And the company just never seems to be able to turn a profit.
Nonetheless, I continue to follow the story as it is a great comparable to my top oil and gas idea today.
Independence reported results today, which solidified my thesis in my top stock idea even more. Day rates for Q3 moved to $28,000 per day and margin per day was a cool $11,000. Even better, guidance suggest that day rates in Q1 2023 will be north of $32,000 per day with margins per day north of $15,000.
My top idea owns a collection of high quality onshore drilling rigs that the market has seemed to forgotten about. With onshore drilling rates at current levels, this company should generate significant cash flows. I sent this email to a few individuals the other day which highlights my thesis on the stock.
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