Fred Olsen Energy (Sell, TP: NOK3.00) - Short-term contract secured
FOE secured a 60-day contract (1 well) plus four options with BP at the UK for USD138k per day. As we believe the job is for the Rhum field, it was one of very few contractors able to execute the programme due to sanctions and partners in the field. We expect USD10m of reactivation costs, and we consequently estimate the job is cash flow negative by USD7m. All options need to be exercised to achieve a small profit. Still, we believe it is the right move FOE to reactivate the rig, which increases the probability of further work. As we had assumed the rig would start working at USD140k from mid-2018, we see very limited estimate changes.Fred Olsen Energy is engaged in offshore drilling as well as engineering and fabrication services. Co. provides services and operates within the two segments; offshore drilling and engineering and fabrication. The Offshore Drilling segment provides services to the offshore oil and gas industry. The Engineering and Fabrication segment provides engineering, fabrication, ship building and repair services for various offshore and onshore industries.
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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