Shelf Drilling (Buy, TP: NOK115.00) - A reactivation-heavy quarter
Shelf Drilling reported Q4 shy of our expectations, mainly due to higher reactivation cost in Q4. Reactivation cost of the acquired rigs from Seadrill was somewhat higher than we had assumed and in addition there were cost expenses associated with rig start-ups in India, Nigeria and Italy. Further, we have incorporated the latest fleet status report in our estimates, which have brought down 2018 estimates somewhat due to slightly later start-up for rigs coming back on contract in Q1. Despite the soft Q4 and lowered expectations for H1, we like Shelf Drilling as it has been able to put multiple rigs back on contract with a positive EBITDA contribution, and its recent USD600m note extended the liquidity runway to 2025.
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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