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

|By:, SA News Editor

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).