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Rosneft deal seen as good news for Seadrill, North Atlantic, drilling industry

North Atlantic Drilling's (NADL +8.9%) deal with Rosneft (RNFTF) is particularly good news for Seadrill (SDRL +1.5%), Cowen's J.B. Lowe says, as SDRL gains a foothold into the Russian market, adds significant backlog during the market downturn and monetizes part of its North Atlantic Drilling investment; also, a cash infusion is a positive given growing concern over SDRL’s ability to pay its dividend.

Morgan Stanley’s Ole Slorer thinks the deal is good for the entire industry, seeing the reduction in near term rig availability as an important turning point for the entire offshore driller space; it also expects further contract signings in Brazil and west Africa to help reverse current beaten down sentiment.

Lowe likes Transocean (RIG +1.6%) among drillers in the North Sea, where the number of rigs will drop as NADL's rigs head to Russia, while Slorer recommends laggards with limited business in Brazil, such as Helix Energy (HLX), Oceaneering (OII) and Frank’s International (FI).

Comments (7)
  • saratogahawk
    , contributor
    Comments (2514) | Send Message
    Norway should be very nervous right now since some of the NADL equipment may eventually pull from Norway waters to service the Rosneft deal. I would be talking very fast to RIG about harsh environment equipment if I was STO.
    27 May 2014, 12:35 PM Reply Like
  • Choosh
    , contributor
    Comments (477) | Send Message
    Thanks, very insightful.
    27 May 2014, 01:29 PM Reply Like
  • allanmsmith
    , contributor
    Comments (13) | Send Message
    There should be more information forthcoming when Seadrill announces first quarter earnings tomorrow but this deal augers well in my opinion.
    27 May 2014, 01:21 PM Reply Like
  • jayemel
    , contributor
    Comments (16) | Send Message
    Allan, nicely turned phrase ("augers well")!
    27 May 2014, 01:32 PM Reply Like
  • arthur_bishop1972
    , contributor
    Comments (3357) | Send Message
    It appears to be helping ESV and NE shares too.
    27 May 2014, 03:38 PM Reply Like
  • Thewaltzy
    , contributor
    Comments (692) | Send Message
    Any reason why RDC & ATW dragged up with??
    27 May 2014, 04:06 PM Reply Like
  • doghousecontributor
    , contributor
    Comments (1636) | Send Message
    Where are all the negative articles now? especially seeking profits, aka seeking pennies. Those doomsayers made their pennies going after SDRL, and now are focused on some other company to bash.


    LONG SDRL & SFL another JF company, that had a good quarter and raised their divy today
    27 May 2014, 09:23 PM Reply Like
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