DnB Markets - Valaris PLC Class A (E65F) Wary of high consensus

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DnB Markets

Martin Huseby Karlsen

Wary of high consensus

Q3 EBITDA was 12% above consensus but 3% below our forecast. There was no major news on the earnings call except for the Q4 guidance, which included several one-offs related to the Atwood transaction. While we like Ensco for its attractive asset valuation versus peers, we are concerned consensus 2018e and 2019e EBITDA is too high (we are 22% and 45% below, respectively). We believe consensus costs are too low and revenues are also too high, possibly due to the undisclosed dayrates. We have cut our target price to USD5.00 (5.50); our recommendation remains HOLD.

27/10/2017 11 EN

Underlying

Valaris PLC Class A

Ensco is an offshore contract drilling company engaged in providing offshore contract drilling services to the international oil and gas industry. As of Dec 31 2017, Co. owned and operated an offshore drilling rig fleet of 62 rigs. Co.'s rig fleet includes 12 drillships, 11 semisubmersible rigs, four moored semisubmersible rigs and 38 jackup rigs, including rigs under construction. Co.'s business consists of three operating segments: floaters, which includes its drillships and semisubmersible rigs; jackups; and other, which consists of management services on rigs owned by third-parties. Co.'s two reportable segments, floaters and jackups, provide one service, contract drilling.

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GB00B4VLR192 Frankfurt Stock Exchange United Kingdom

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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Wary of high consensus

Petrobras UDW rig selection

Back to normal with Petrobras

Monthly LMI Update Independent Investment Research

Medistim (Hold, TP: NOK190.00) - Sales in Americas weaken

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