Ensco is an offshore contract drilling company engaged in providing offshore contract drilling services to the international oil and gas industry. As of Dec 31 2017, Co. owned and operated an offshore drilling rig fleet of 62 rigs. Co.'s rig fleet includes 12 drillships, 11 semisubmersible rigs, four moored semisubmersible rigs and 38 jackup rigs, including rigs under construction. Co.'s business consists of three operating segments: floaters, which includes its drillships and semisubmersible rigs; jackups; and other, which consists of management services on rigs owned by third-parties. Co.'s two reportable segments, floaters and jackups, provide one service, contract drilling.
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.
We believe unrealistic consensus and negative estimate revisions for the past six years have been key contributors to weak share price performances for the offshore drillers. As a positive, 2020e consensus is now fairly realistic (we are 5% below, compared to 21% a year ago). For 2021e, we are still 24% below consensus EBITDA despite consensus dropping sharply over the past year. We expect upcoming datapoints with long-term UDW contracts around the USD250k/day level or below to support our estimates and result in consensus cuts. After years of negative revisions, we hope consensus catches on. ...
In light of what appears to us to be a surprise to the wider equity market that Diamond Offshore needed to tap its revolving credit facility (RCF) in 2020, and the corresponding negative share price reaction, we have summarised the liquidity runway and likely use of RCFs for the offshore drillers. We continue to estimate that all contractors with RCFs, except Transocean, have already tapped their RCFs or will do so during 2020, and will be heavily dependent upon RCF extensions in 2022–2023. Other contractors without (meaningful) RCFs – like Awilco Drilling, Borr Drilling, Pacific Drilling and ...
Although the refinancing is not fully concluded, management said an “amend and extend” solution with lenders was in its closing stages. We estimate a 2020 net debt/EBITDA of 5.4x and enough cash flow for 2020–2021 to cover interest costs and even some debt amortisation. The current capital structure and option-like valuation (market cap is 8% of the EV) should result in a boost for the equity if the debt maturities are extended without new equity, which is likely in our view. We reiterate our BUY and NOK5 target price, supported by our SOTP of NOK6.5.
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