Songa Offshore: Re-Organizing Towards A Better Future
- After crashing by 65% in 2013, Songa Offshore (a mid-water driller) stock is well positioned for a strong recovery in 2014 and 2015.
- Strong order backlog of $6.6 billion with highest backlog per rig among peers, provides robust revenue visibility.
- Four new rigs to be delivered in 2014 and 2015 are contracted with Statoil for long-term and will provide revenue and EBITDA bump-up.
- Current and forward EV/EBITDA valuation compared to peers points to a valuation gap making Songa Offshore a Strong Buy.
- Debt amendment provides for relatively long maturity schedule and financing of new rigs certain on back of strong backlog and Statoil support.