Barclays Cuts Offshore Drillers En Masse, Sets $0.50 Price For Ocean Rig

Courtesy of Benzinga.

In a new report, Barclays analyst David Anderson discussed the firm’s increasingly bearish outlook for offshore drillers. The firm has issued another aggressive round of price target cuts ahead of Q4 earnings season.

“Given the dramatic decline in the oil price and continued negative data points that point toward a prolonged downturn for offshore drillers, we reduce our normalized day rate assumption, resulting in valuations for all offshore drillers in our coverage being lowered by an average of ~50 percent,” Anderson explained.

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He believes that management and investors will be focused primarily on liquidity, cost reductions, rig retirements and day rates this earnings season.

Anderson sees the most downside to Transocean LTD (NYSE: RIG) (price target $6), Diamond Offshore Drilling Inc (NYSE: DO) (price target $14) and Ocean Rig UDW Inc (NASDAQ: ORIG) (price target $0.50).

While Barclays maintains Underweight ratings on the aforementioned offshore drillers, the firm is slightly more constructive on Equal-Weight rated ENSCO PLC (NYSE: ESV), Rowan Companies PLC (NYSE: RDC) and Atwood Oceanics, Inc. (NYSE: ATW).

Disclosure: The author holds no position in the stocks mentioned.

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