Seadrill (Buy, TP: NOK600.00) - Focus on clarity for tier-2 rigs
While the high-end deepwater market is set to retain its momentum, and focus for the investment case relates to extending its late-2025 Brazil rollovers, we see investors seeking clarity for its tier-2 harsh & deepwater rigs. We have risked such rigs (West Phoenix in particular) in our NAV and estimates, which probably explains why we are c16% below consensus for 2025–2026e. Despite these deviations and the risks of near-term share price volatility and lower 2024 guidance, we consider Seadrill among the most attractively valued large cap offshore drillers at a 2026e EV/EBITDA of 4.0x and cash flow yield to EV of 16%. We reiterate our BUY and NOK600 target price.
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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