Diamond Offshore (Hold, TP: USD4.00) - Hit by delayed contract startups
Diamond Offshore reported solid Q4 EBITDA, but the beat was more than offset by a soft contracting update. Along with a weak UK floater market, we now model Ocean GreatWhite to stay idle until spring 2021 (versus end-September 2020 previously), and several UDW drillships have delayed start dates. We have cut our 2020e and 2021e EBITDA by 26% and 19%, respectively, and are significantly below consensus. It appears the market was surprised by the cash burn in 2020, which we expect to get worse in 2021. We reiterate our HOLD, but have cut our target price to USD4 (5).Diamond Offshore Drilling provides contract drilling services to the energy industry around the globe. The company's fleet enables it to provide services in the floater market on a worldwide basis. The company's contracts to provide offshore drilling services vary in their terms and provisions. The principal markets for the company's offshore contract drilling services are: the Gulf of Mexico, including the U.S., and Mexico; South America, principally offshore Brazil, and Trinidad and Tobago; Australia and Southeast Asia, including Malaysia, Indonesia, Myanmar and Vietnam; Europe, principally offshore the U.K., and Norway; East and West Africa; and the Mediterranean.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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