FRED OLSEN ENERGY Short-term contract secured FOE secured a 60
DNB ANALYSE
FRED OLSEN ENERGY Short-term contract secured FOE secured a 60-day contract (1 well) plus four options with BP at the UK for USD138k per day. As we believe the job is for the Rhum field, it was one of very few contractors able to execute the programme due to sanctions and partners in the field. We expect USD10m of reactivation costs, and we consequently estimate the job is cash flow negative by USD7m. All options need to be exercised to achieve a small profit. Still, we believe it is the right move FOE to reactivate the rig, which increases the probability of further work. As we had assumed the rig would start working at USD140k from mid-2018, we see very limited estimate changes.
First new contract since 2013 The Blackford contract for 1+4 wells with BP marks the first new drilling contract (excluding extensions) since 2013 for FOE, and for a company with no rigs in operations it is welcomed from an operational perspective.
Cash-flow negative. Assuming USD 10m reactivation and mobilization cost and USD 80k/day operating cost, we estimate that the job is USD 7m cash-flow negative based on the firm well. Should all four options be exercised we estimate a small profit.
In line with estimates. As we had assumed the rig started working in mid-2017 at an effective dayrate of USD140k, we consider the dayrate in line with our forecast and only see minor estimate revisions as start-up is slightly earlier than assumed.
Not many available jobs in 2018 While reactivating a rig from a loss-making project can be questioned, we believe it is the right move from FOE as a warm rig has a higher probability to win new work. Still, our updates suggest that the majority of contracts at the UK with 2018 start have already been awarded, and should the options not be exercised we see a risk that the rig will be stacked again shortly.
SELL maintained. As the contract is largely in line with our forecast, we find the stock overvalued and there is an upcoming refinancing, we maintain our SELL recommendation and target price of NOK3.
SELL
FRED OLSEN ENERGY Short-term contract secured FOE secured a 60-day contract (1 well) plus four options with BP at the UK for USD138k per day. As we believe the job is for the Rhum field, it was one of very few contractors able to execute the programme due to sanctions and partners in the field. We expect USD10m of reactivation costs, and we consequently estimate the job is cash flow negative by USD7m. All options need to be exercised to achieve a small profit. Still, we believe it is the right move FOE to reactivate the rig, which increases the probability of further work. As we had assumed the rig would start working at USD140k from mid-2018, we see very limited estimate changes.
First new contract since 2013 The Blackford contract for 1+4 wells with BP marks the first new drilling contract (excluding extensions) since 2013 for FOE, and for a company with no rigs in operations it is welcomed from an operational perspective.
Cash-flow negative. Assuming USD 10m reactivation and mobilization cost and USD 80k/day operating cost, we estimate that the job is USD 7m cash-flow negative based on the firm well. Should all four options be exercised we estimate a small profit.
In line with estimates. As we had assumed the rig started working in mid-2017 at an effective dayrate of USD140k, we consider the dayrate in line with our forecast and only see minor estimate revisions as start-up is slightly earlier than assumed.
Not many available jobs in 2018 While reactivating a rig from a loss-making project can be questioned, we believe it is the right move from FOE as a warm rig has a higher probability to win new work. Still, our updates suggest that the majority of contracts at the UK with 2018 start have already been awarded, and should the options not be exercised we see a risk that the rig will be stacked again shortly.
SELL maintained. As the contract is largely in line with our forecast, we find the stock overvalued and there is an upcoming refinancing, we maintain our SELL recommendation and target price of NOK3.
SELL
Redigert 21.01.2021 kl 09:09
Du må logge inn for å svare
5099
19.01.2018 kl 12:47
3115
Merkelige greier. Mange store investorer kjøpte seg inn bare noen få uker i forkant av dette. Skal ikke de vite bedre enn å gå tungt inn rett før en emisjon? DnB sier jo rett ut i denne analysen at det vil komme en refinansiering i FOE og at den bør selges.
Noe skurrer her.
Noe skurrer her.
Frontman
19.01.2018 kl 13:06
3084
Ja dette er DNB's analyse. I dag så har også SEB oppjustert kursmål til 32. Men det er det ikke så viktig å skrive om.
tobben
19.01.2018 kl 13:18
3074
DNM har nettopp gått ut av listen av største aksjonærer , og er vel blandt dem som har bidratt på shortsiden?
Aksjeoptimist
19.01.2018 kl 13:25
3082
Spørsmålet her er jo simpelt: Vet DNB noe vi ikke vet, eller prøver de å redde seg selv og shortingen deres??
Redigert 19.01.2018 kl 13:26
Du må logge inn for å svare
tobben
19.01.2018 kl 13:29
3073
Omkring kr25 er hvertfall "balansepunktet" på de "beste" shortene slik jeg vurderer det. UBS shorten som startet i sommer , er skikkelig i minus og ble økt ganske mye i november.
Anywhere
19.01.2018 kl 13:37
3066
Uansett en hyggelig aksje for trading på 20-tallet dette. Har tatt en posisjon long rundt 12, men svingt ut og inn 3 ganger nå mellom 22 og høyt 24-tall. Det er rundt 35% ekstra avkastning på noen uker. Ut i dag på 24,8-snitt, men er ekstra spent på om det kan ligge andre saker i kjømda for FOE. Kan ikke beskylde DNB for å ha oversikt over alt...
aslla
19.01.2018 kl 15:17
2991
Her gjelder det for mange først og fremst teknisk å beskytte sine shorts!