Differentiated, but expensive
Diamond Offshore reported Q3 EBITDA of USD142m, below our forecast but in line with consensus. Two 1-well contracts in the UK and Australia were announced with rates we believe to contribute USD30–40k per day each at the EBITDA level. While Diamond Offshore has low leverage and superior backlog and liquidity runway versus most peers, we see increased concern that the deepwater market downturn will be prolonged, which will be a drag on earnings as the company has significant UDW rollover exposure in 2019/2020. SELL reiterated.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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