Deepwater drillers could plunge 35% on average, Barclays says

|By:, SA News Editor

The past 12 months have been tough for deeepwater drillers, and the stocks don’t look likely to find a bottom soon, Barclays believes.

Barclays' base case assumes dayrates continue to slide with UDW dayrates dropping to $475K and total average rates dropping 16% from its bull case - the most likely outcome as the firm continues to believe the market still needs to work through excess capacity and that conditions will get worse before they get better; under this scenario, Barclays says all companies in its coverage universe (except Rowan) are subject to an average share price drop of 35%.

Under this scenario, the firm thinks Seadrill (SDRL -1.6%) could plunge 52%, Diamond Offshore (DO -1.5%) could sink 45%, Transocean (RIG -0.6%) 24% and Atwood Oceanics (ATW -0.7%) 15%; of the majors in the sector, Rowan (RDC -0.7%) would hold up best, gaining 2%.