Shelf Drilling North Sea (Buy, TP: NOK45.00) - Visibility suggests liquidity gap
After Shelf Drilling North Sea secured a contract last week for its idle North Sea jackup, relocating it to Southeast Asia, all five of its jackups are now contracted. However, due to idle time for two of its jackups in H1 2024 and relocation costs, we estimate a small temporary liquidity shortfall from Q2 2024. We believe it has multiple alternatives to address this shortfall. The stock is trading at a significant discount to underlying values and peers. Bridging the gap in implied asset values to peers would indicate c40% upside potential. We reiterate our BUY and NOK45 target price, reflecting a c26% discount to our NAV of NOK61/share.
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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