Shelf Drilling (Buy, TP: NOK75.00) - Smart and accretive growth
Shelf Drilling announced that it has acquired two stranded jack-up newbuilds from China Merchants Heavy Industries (CMHI) for USD87m each. The acquisition is financed by issuance of new shares in Shelf Drilling at USD6.5/share, 56% above yesterday’s close. Hence, based on the share price at yesterday’s close, the effective purchase price is USD56m per rig. We consider this positive as: 1) it allows for fleet growth at historically low asset values; 2) the rig acquisition is fully funded by issuance of new equity; and 3) new equity is issued at a 56% premium to yesterday’s close and brings a new strategic partner (CMHI) on board.
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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