DnB Markets - Diamond Offshore Drilling Inc. (DO) Diamond Offshore (Sell, TP: USD10.00) - Helping 2020 estimates

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DnB Markets

Martin Huseby Karlsen

Diamond Offshore (Sell, TP: USD10.00) - Helping 2020 estimates

We consider the main positive with the Petrobras lawsuit settlement and subsequent 'blend and extend' deal to be that Diamond is able to build backlog for 2020e. Still, we see a meaningful earnings cliff in 2020e with EBITDA down 88% YOY, primarily due to high legacy backlog in 2019e. For the 'blend and extend' deal, we estimate an implied day-rate of USD 145k for the incremental 2-year of backlog added to the UDW rig Ocean Valor. This is in line with our market view on UDW, but believed to be below consensus.

05/01/2018 11 EN

Underlying

Diamond Offshore Drilling Inc.

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.

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US25271C1027 United States

Provider

DnB Markets

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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Analysts

Martin Huseby Karlsen

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Diamond Offshore (Sell, TP: USD10.00) - Helping 2020 estimates

Muted 2025 growth expectations

ENI capex cut but maintains shareholder returns

E&P spending sensitivity explored

Seafood - Fat Trout Weekly

Seafood - Fat Trout Weekly

Seafood - Norwegian biomass update

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