Credit Suisse likes Noble Energy, Rowan among offshore drillers


Credit Suisse reviews “beaten, battered and bruised” offshore drillers, noting the sector has continued to disappoint YTD after underperforming by ~15% in 2013.

As lower dayrates and slowing offshore capital spending keeps the drillers "in the penalty box," the firm says stock selection is key in this environment and prefers Noble Energy (NBL +0.4%), which a de-risked NAV of $32, and Rowan (RDC -1.2%), whose premium fleet trades at a discount.

The firm cuts Atwood Oceanics (ATW +0.2%) to Neutral from Outperform, explaining that ATW and Seadrill (SDRL +0.4%) “are playing a different game - paying out all of their cash flow as a dividend and shifting assets to SDLP (financial arbitrage).”

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Comments (9)
  • grox01
    , contributor
    Comments (1087) | Send Message
     
    I smell a hidden agenda here, I think this is the other way around... selling what Credit promote and buying what the downgrade !

     

    I wouldn't be surprised to read about it in a couple of months.
    17 Jan 2014, 12:12 PM Reply Like
  • ComputerBlue
    , contributor
    Comments (1328) | Send Message
     
    ATW paying out all of their cash flow? Ha.
    17 Jan 2014, 12:28 PM Reply Like
  • mickeystoysz16
    , contributor
    Comments (362) | Send Message
     
    Yes shows how clueless these analysts are because ATW does not pay a dividend. They are too busy buying new drill rigs for double digit organic growth. If the day rate in the rig market was so bad they would not be buying four new rigs with an option due in March to order number 5.
    17 Jan 2014, 06:49 PM Reply Like
  • financeminister
    , contributor
    Comments (1205) | Send Message
     
    So I pulled the trigger since SDRL seems to have offered an attractive entry point after the recent drop. Filled this year's ROTH IRA with SDRL when it was red today... SDRL is one of my riskier bets because of their large debt but I'm leaning on the mangement to maintain their shareholder friendly decisions. The dividend yield of 9.5% seems to be sufficient compensation for keeping it in IRA and reinvesting it to reduce risk and keep gains. Hopefully they can maintain it for years to come if not cut it. Wonder what interest rate risks they face.
    17 Jan 2014, 12:35 PM Reply Like
  • dxbsmith
    , contributor
    Comments (24) | Send Message
     
    Apples to oranges. Noble Energy is not a drilling contractor. Noble Corporation is.
    17 Jan 2014, 01:02 PM Reply Like
  • marc heilweil
    , contributor
    Comments (177) | Send Message
     
    CS likes the driller Noble Corporation not the producer Noble Energy
    17 Jan 2014, 02:09 PM Reply Like
  • Bill L
    , contributor
    Comments (12) | Send Message
     
    RDC is at a nice discount - but I think $30 to $31 is the sweet spot to enter. Also, in the 3Q conference call last November the CEO said they are going to the Board in January (2014) with a recommendation for the dividend reinstating - but it will start small.
    17 Jan 2014, 03:56 PM Reply Like
  • grox01
    , contributor
    Comments (1087) | Send Message
     
    RDC trades at 14 p/e while ATW trades at 9 p/e... you tell me which is at a better discount ?
    17 Jan 2014, 04:51 PM Reply Like
  • joemarko
    , contributor
    Comments (32) | Send Message
     
    What is wrong with borrowing money to have the most modern fleet out there? Plus every ship sdrl puts in the water has a backlog of work . It's like a contractor buying a new truck so he can work every day, because his present ride is getting repairs all the time. What do you want?
    20 Jan 2014, 06:33 AM Reply Like
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