Ensco Int’l Loses Millions Betting on Its Own Stock

Pursuit of its own shares was probably not a meaningful tool in building value for Ensco stockholders.

Last Updated Oct 29, 2008 2:16 AM EDT

In September 2008, the Board of Directors authorized the repurchase of an additional $500 million of Ensco common stock.

The Question: Might reinvesting the money on expanding its core offshore drilling business — opportunistic purchases of rigs on the cheap from smaller companies unable to compete in the current environment — be a better spend?.

© 2008 CBS Interactive Inc.. All Rights Reserved. In total, the company had purchased 16.5 million shares at a total cost of $937.6 million, or an average price of $56.79 per share.

Acclaimed movie director Billy Wilder once said: “Hindsight is always twenty-twenty.” At October 27, 2008, with the common stock of Ensco trading at $33.40 a share, the company had lost about $386.5 million, or almost 41 percent, of the cash invested in the repurchase programs.

The Upshot: During the nine-month period ended September 30, 2008, Ensco repurchased 3.7 million shares of its common stock at a cost of $256.0 million (an average cost of $69.92 per share) under a 2007 authorization plan

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