I continue to knock on every piece of wood, artificial or otherwise, as we continue to stake through this earnings period without a major blowup. With so many positions this is a bit uncanny – and my assumption will be this only means next earnings period we’ll be taking some body blows as what the market gives, she takes away soon enough. But for now we enjoy.

Deep sea oil driller Atwood Oceanics (ATW) reports a serious beat on the bottom line and a solid beat on the top line tonight. This continues the pattern in the sector and it only gets better from here as old contracts disappear and new contracts get signed at much higher rates. Analysts have estimated $6.71 for 2008 profits and $10.49 for 2009… I continue to believe this entire group is sadly undervalued as it’s been treated as a CYCLICAL play as opposed to a SECULAR play… the latter should derive much higher valuations but as you know, crude is going back to $50 anyday now as the “dollar strengthens” and we stuff a few hundred million Indian, Chinese, and Brazilians back to the countryside and tell them “no progress for you!” So hence, these drillers are valued as if dayrates are going to plummet any quarter now…

The press release for the earnings report is short & sweet…

• Atwood Oceanics, Inc., (ATW), Houston-based International Drilling Contractor, announced today that the Company earned net income of $41,755,000 or $1.30 per diluted share, on revenues of $113,530,000 for the quarter ended March 31, 2008 compared to net income of $31,757,000 or $1.01 per diluted share, on revenues of $94,262,000 for the quarter ended March 31, 2007. For the six months ended March 31, 2008, the Company earned net income of $80,304,000 or $2.49 per diluted share, on revenues of $224,578,000 compared to net income of $52,842,000 or $1.67 per diluted share, on revenues of $183,062,000 for the six months ended March 31, 2007.

And that folks, was the press release aside from some tables for us numbers nerds to salivate over. Essentially they beat the revenue line by a few million and earnings by $0.15. And away Atwood will go, quietly executing in some dark corner of the market, until we revisit her in 3 months. I still think this group is overextended and prone to pullback, but by assessing these fundamentals in earning reports we can make our buying lists for the next pullback and where we want to reallocate our cash.

p.s. someone left a comment a few days ago about National Oilwell Varco (NOV) and why it was not moving…. my comment was, it was strange to me as well considering the move in crude – well we got her moving today with a 9% spike. Finally. (I took some off a bit too early in the day however)

Long both names mentioned in fund; no personal position

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