Shelf Drilling (Buy, TP: NOK40.00) - Not for the fainthearted
With Aramco rig suspensions (and likely terminations) now confirmed, we have cut our 2024–2026e EBITDA by 16–28%. Being the most exposed offshore driller to the Aramco situation, the stock has already taken a beating, and we view current levels as an attractive entry point. We see no balance sheet concerns. While its shareholder return story has clearly been dented, we consider the 2025e EV/EBITDA of 2.8x and cash flow yield to EV of 15% as compelling. We reiterate our BUY but have cut our target price to NOK40 (50).
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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