Shelf Drilling North Sea (Buy, TP: NOK45.00) - Key contract win in the North Sea
The niche market in the North Sea is less affected by the more competitive near-term jackup environment, in our view. The CJ70 extension with Equinor and additional options should help earnings visibility and crystalise its underlying value. Additionally, it should be helpful in assessing various alternatives in light of the previously highlighted temporary liquidity shortfall in Q2 2024. The stock is trading at a significant discount to underlying values and peers. Bridging the gap in implied asset values to peers would indicate c80% upside potential. We reiterate our BUY and target price of NOK45.
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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