Demand for Midwater Rigs to Rise (RIG, DO, ESV, NE)

In a note today, Credit Suisse talked up the coming demand for offshore drilling rigs designed for water depths of 1,000 feet to 3,600 feet. The analysts claim that incremental demand for 13 new rigs coupled with new deliveries of just 8 new rigs in 2013 will raise dayrates into 2014.

Transocean Ltd. (NYSE: RIG), Diamond Offshore Drilling Inc. (NYSE: DO), and Ensco plc (NYSE: ESV) are best positioned to take advantage of the rising day rates and tight supply. Transocean recently contracted for a new rig in the North Sea at a day rate of $405,000 for 11 months, a 60% increase from previous contracts.

The analysts also say that the North Sea is the sweet spot for new drilling and that only 50% of the rigs currently working the Norths Sea are capable of midwater work. In addition to Transocean, which owns a total of 35 midwater rigs, Diamond (19 rigs), and Ensco (six rigs), Noble Corp. (NYSE: NE) owns 8 midwater rigs.

Stocks in the offshore drillers are trading down less than 1% today as crude prices remain nearly flat.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Oil & Gas Tagged: DO, ESV, NE, RIG
Read Full Story

Markets

DJIA 21,394.76 -2.53 -0.01%
NASDAQ 6,265.25 28.56 0.46%
S&P 500 2,438.30 3.80 0.16%
NIKKEI 225 20,157.82 25.15 0.12%
HANG SENG 25,767.48 97.43 0.38%
DAX 12,733.41 -60.59 -0.47%
USD (per EUR) 1.12 0.00 -0.01%
USD (per CHF) 0.97 0.00 0.04%
JPY (per USD) 111.31 0.07 0.06%
GBP (per USD) 1.27 0.00 0.05%

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.