BMO foresees better times ahead for offshore drilling stocks

Offshore drillers have been pounded YTD, but BMO Capital says its time at least to become less bearish as it upgrades shares of Transocean (RIG -1%), Seadrill (SDRL -0.8%), Diamond Offshore (DO +0.1%), Ensco (ESV -0.1%), Noble (NBL -1.2%), Rowan (RDC -0.1%) and Atwood Oceanics (ATW +0.3%) to Market Perform from Underperform.

BMO believes the stocks largely discount the weakness expected in the industry in 2014-15 with consensus estimates now reflecting the anticipated level of dayrate reductions, and the potential for a surprise demand uptick now outweighs already priced-in risks of further weakening.

The firm expects investors to focus on NBL’s upcoming spinoff of its commodity assets, which it says makes sense strategically but with a “challenging" valuation, on SDRL’s dividend, and on RIG’s fleet status and the valuation of its MLP.

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Comments (3)
  • rickknott
    , contributor
    Comments (72) | Send Message
    Please correct your alert re. Noble. The offshore driller you are referring to is stock ticker NE (not NBL, as in Noble Energy).


    NE is Noble Corporation which is the offshore driller which intends to spin-off Paragon.


    15 Jul 2014, 12:31 PM Reply Like
  • Rappenco
    , contributor
    Comments (697) | Send Message
    Good point ricknott ,be careful with the Noble name and symbols. There are a couple companies with this same name which can cause confusion.
    15 Jul 2014, 01:53 PM Reply Like
  • Clayton Rulli
    , contributor
    Comments (3424) | Send Message
    yeah if anything low prices for rigs is good for NBL. They own the leases and actually do the drilling
    24 Jul 2014, 02:25 PM Reply Like
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