- Ocean Rig UDW (NASDAQ:ORIG) is initiated with a Buy rating at Standpoint Research, which believes ORIG is “the baby thrown out with the bath water” of offshore drillers.
- ORIG is in a unique position among its peers, the firm says, with its modern high specification fleet, a solid backlog of nearly $4.7B, no immediate debt maturities and ~$500M of free cash on its balance sheet, to withstand a prolonged market downturn.
- As oil prices stabilize, project costs continue to decline and oil companies focus on reserve replacement and maintaining production, drilling activity will pick up and preference will be given to new assets, benefiting ORIG, Standpoint says.
- The firm thinks ORIG could trade as high as $14 if all goes well, but even if oil falls again shares would find support ~$8, at which point it would "double down.”