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Beware value traps among offshore drillers, analyst says

Jan. 06, 2015 3:49 PM ETTransocean Ltd. (RIG) StockRIG, RDC, NE, VALBy: Carl Surran, SA News Editor16 Comments
  • Offshore drillers have tanked in the past six months - Transocean (RIG -1.4%) has plunged 74%, Ensco (ESV -0.3%) has skidded 49%, Noble Corp. (NE -1.2%) lost 46% and Rowan (RDC +0.3%) is off 25% - but the group looks like just another value trap, according to analysts at Societe Generale.
  • Sticking to its outlook for depressed offshore driller multiples, the firm is concerned that another leg down in dayrates remains, and that the lower spending outlook for 2015 will have more tangible ramifications for the shorter cycle jack-up market.
  • However, the firm upgrades hard-hit Ensco to Buy from Hold; even with reduced dayrate assumptions, ESV appears to be in the best financial shape and should be able to meet its upcoming debt maturities, and even increase its dividend modestly in 2016 if it chooses to do so.

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