Darren Gacicia 203.276.5664 ______________ 1 Vertical Drilling Weekly North American Risks Lead Our Forecasts Lower Ratings unchanged, lowering our estimates and price targets. We are lowering our estimates and price targets across oil service shares to reflect heightened risk to upstream activity from North American operators due to moderating commodity prices, decelerating upstream cash flows, and tighter capital markets. Although negative estimate revisions may lead volatility to persist in oil services shares, we see lowered expectations largely discounted into shares that have fallen 30-50% since July. Given that current valuations screen attractively against reduced earnings estimates, lower growth, and higher risk adjusted forecasts and price targets, we anticipate oil services shares will trade higher into the end of the year. We continue to like SLB and BHI in large caps, DRQ and NBR in small/mid. caps, and RIG, SDRL, and DO among offshore drillers. North American activity at risk from tougher conditions. Our estimate revisions largely reflect risks to North American activity from smaller operators in the face of lower cash flows from weakening commodity prices, funding gaps for their spending plans, and reduced access to capital from risk-averse capital markets. To reflect these risks, we are lowering our 2012 North American rig count forecast. (pgs. 3 & 12) Pressure pumping sees biggest risk from slower growth. With pressure pumping capacity growing from 10m HP in 1Q11 to over 17m HP by the end of 2012 according to our bottoms up analysis, we see the market reaching a balance in mid-2012 under our reduced rig count forecast. As supply balances demand, we anticipate the market will maintain its service intensity, but yield its pricing gains garnered since 2009, leading estimates lower. Conclusion of 2011 North American budget campaigns may prove a negative catalyst. We see a rally in oversold oil services shares into the end of the year, as the impetus to spend the remainder of 2011 budgets may support 4Q11 North American activity and ease concerns of fearful investors. If WTI prices continue to hover just above project breakeven levels in the $70- $80 range, European credit concerns continue to tighten capital markets, and funding gaps persist, 2012 budgets may arrive with more cautious spending targets. If so, a deceleration of upstream activity and rig counts may arrive in 1Q12, creating a negative catalyst for oil service shares. International activity outlook more stable. Aside from the UK, where a crop of E&P companies need financing to develop prospects in the North Sea, we see less risk to international upstream activity from funding gaps and financing needs in tighter capital markets. Cash flow support from higher Brent prices and prospect of spending from larger, better capitalized independent oil companies, national oil companies, and OPEC members looking to maintain spare capacity suggest a positive trajectory for upstream spending. Meanwhile, strong tendering for offshore rigs in international basins continues to provide comfort for our positive international outlook. October 10, 2011 Table of Contents Overview 1 Feature: Reflecting Risk in Estimates 2 Coverage Synopsis 8 Global Rig Count 9 Charting Global Rig Count 10 Global Rig Count & Oil Production 11 Global Rig Count Forecast 12 Global Jackup Market 13 Jackup Dayrate Analysis &Forecast 14 Global Deepwater Markets 15 Global Midwater Market 16 Cum. Rig Demand by Classification 17 Incremental Tendering & Demand 18 Floater Dayrate Analysis & Forecast 19 Jackup Fleet Expansion 20 Floater Fleet Expansion 21 Offshore Driller Valuation Methodology 22 Dividend Yield-Based Valuations 23 North American Natural Gas 24 Global Oil Markets 25 Key Oil Market Metrics 26 Global Oil Demand & Economics 27 Oil in Transit 28 US Oil Demand & Oil Stocks 29 Global Oil Stocks and Refining Margins 30 Earnings Summary 31 Valuation Summary 32 Valuation Summary – Price Targets 33 Tracking Oil Service Sector Options 34 A View From Debt Markets 35 Estimate Revisions 36 Trading Analysis 37 Sector Performance Summary 38 Estimate Revisions 31 Price Target Revisions 7 Darren Gacicia +1-203-276-5664 [email protected]
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Darren Gacicia 203.276.5664 ______________
1
Vertical Drilling Weekly
North American Risks Lead Our Forecasts Lower Ratings unchanged, lowering our estimates and price targets. We are
lowering our estimates and price targets across oil service shares to reflect heightened risk to upstream activity from North American operators due to moderating commodity prices, decelerating upstream cash flows, and tighter capital markets. Although negative estimate revisions may lead volatility to persist in oil services shares, we see lowered expectations largely discounted into shares that have fallen 30-50% since July. Given that current valuations screen attractively against reduced earnings estimates, lower growth, and higher risk adjusted forecasts and price targets, we anticipate oil services shares will trade higher into the end of the year. We continue to like SLB and BHI in large caps, DRQ and NBR in small/mid. caps, and RIG, SDRL, and DO among offshore drillers.
North American activity at risk from tougher conditions. Our estimate
revisions largely reflect risks to North American activity from smaller operators in the face of lower cash flows from weakening commodity prices, funding gaps for their spending plans, and reduced access to capital from risk-averse capital markets. To reflect these risks, we are lowering our 2012 North American rig count forecast. (pgs. 3 & 12)
Pressure pumping sees biggest risk from slower growth. With pressure
pumping capacity growing from 10m HP in 1Q11 to over 17m HP by the end of 2012 according to our bottoms up analysis, we see the market reaching a balance in mid-2012 under our reduced rig count forecast. As supply balances demand, we anticipate the market will maintain its service intensity, but yield its pricing gains garnered since 2009, leading estimates lower.
Conclusion of 2011 North American budget campaigns may prove a negative catalyst. We see a rally in oversold oil services shares into the end of the year, as the impetus to spend the remainder of 2011 budgets may support 4Q11 North American activity and ease concerns of fearful investors. If WTI prices continue to hover just above project breakeven levels in the $70-$80 range, European credit concerns continue to tighten capital markets, and funding gaps persist, 2012 budgets may arrive with more cautious spending targets. If so, a deceleration of upstream activity and rig counts may arrive in 1Q12, creating a negative catalyst for oil service shares.
International activity outlook more stable. Aside from the UK, where a crop
of E&P companies need financing to develop prospects in the North Sea, we see less risk to international upstream activity from funding gaps and financing needs in tighter capital markets. Cash flow support from higher Brent prices and prospect of spending from larger, better capitalized independent oil companies, national oil companies, and OPEC members looking to maintain spare capacity suggest a positive trajectory for upstream spending. Meanwhile, strong tendering for offshore rigs in international basins continues to provide comfort for our positive international outlook.
October 10, 2011
Table of Contents Overview 1 Feature: Reflecting Risk in Estimates 2 Coverage Synopsis 8 Global Rig Count 9 Charting Global Rig Count 10 Global Rig Count & Oil Production 11 Global Rig Count Forecast 12 Global Jackup Market 13 Jackup Dayrate Analysis &Forecast 14 Global Deepwater Markets 15 Global Midwater Market 16 Cum. Rig Demand by Classification 17 Incremental Tendering & Demand 18 Floater Dayrate Analysis & Forecast 19 Jackup Fleet Expansion 20 Floater Fleet Expansion 21 Offshore Driller Valuation Methodology 22 Dividend Yield-Based Valuations 23 North American Natural Gas 24 Global Oil Markets 25 Key Oil Market Metrics 26 Global Oil Demand & Economics 27 Oil in Transit 28 US Oil Demand & Oil Stocks 29 Global Oil Stocks and Refining Margins 30 Earnings Summary 31 Valuation Summary 32 Valuation Summary – Price Targets 33 Tracking Oil Service Sector Options 34 A View From Debt Markets 35 Estimate Revisions 36 Trading Analysis 37 Sector Performance Summary 38 Estimate Revisions 31 Price Target Revisions 7
Key Upstream Spending Drivers: Cash Flow, CAPEX, & Funding Status
Higher Commodity Price Drive Cash Flows
Source: Factset, Vertical Research Partners Cash Flow & CAPEX Well Correlated
Source: Factset, Vertical Research Partners Upstream Spending May Fall to Narrow Funding Gaps
Source: Factset, Vertical Research Partners Note: Charts on page 2 & 3 include data from the following set of companies: APA, APC, BEXP, CHK, COG, COP, CLR, CVX, CXO, DNR, DVN, ECA, EOG, HES, HK, MRO, MUR, NBL, NFX, NXY, OXY, PXD, QEP, RDSA, RRC, STO, SU, SWN, TOT, UPL, WLL, XEC, XOM, EQT, FST, STR. KWK, SD, SM, TLM, WMB
Upstream Cash Flow Leveraged to Oil
Source: Factset, Vertical Research Partners
Unconventional plays drive paradigm shift, as oil drove cash flows & investment. Exploration success within politically stable US and Canada, in combination with high production rates and rising oil prices, translated into positive economics for unconventional plays. North American E&Ps shifted their focus toward unconventional plays, new companies emerged on the back of advantageous acreage holdings, and the Majors shifted attention toward booking domestic reserves. International companies & NOCs entered the North American market to fund joint ventures as means of participating in potential upside and gaining expertise they may export to international opportunities. As cash flows rose with oil prices and capital flooded into the sector, a number of smaller operators found funding to pursue new project to de-risk assets. Given access to capital markets and/or JV partners for funding to develop reserves, as well as prospects to sell to larger competitors, exploration from smaller players supported North American rig count growth. Cash flow & capital market constraints overhang the market’s current operating model. As WTI oil prices hover near project “break even” levels and European debt issues likely tighten credit markets, we see risk to the market relationships that drove recent upstream activity in North America. As illustrated above, companies with leverage to oil production are better able to internally fund their upstream CAPEX programs. As oil prices moderate, cash flows should become more constrained, likely curtailing upstream spending (CAPEX), correlated with cash flow. Similar to 2008/2009, widening funding gaps for the industry, without support from capital markets and industry funding sources, will drive CAPEX back to levels that funded by internal cash flows. Again, if present activity follows the script from 2008/2009, the impetus to spend through 2011 budgets may mask this change in tide during 4Q11, but poses a risk to a correction in activity as the market crossed over to the 2012 budgeting year.
R² = 0.81
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Darren Gacicia 203.276.5664 ______________
3
De-Risking North American Rig Count Growth
Tight Credit Markets Dangerous of US Rig Count
Source: Bloomberg, Baker Hughes, Vertical Research Partners
Small Cap. Names Host Bigger Funding Gaps
Source: Factset, Vertical Research Partners
Leverage &Funding Gaps Pose Risk
Source: Factset, Vertical Research Partners
Land Rig Breakdown – Leverage to Small Private Cos.
Source: Land Rig Newsletter, Vertical Research Partners
Funding gaps & smaller operators present a risk. Small private companies pose a risk to North American activity if financing becomes more difficult. Funding gaps for smaller public E&P’s likely reflect similar capital needs for smaller private operators. Given that these private operators comprise 36% of the US rig fleet, we see a significant risk from tighter capital markets in the wake of European debt issues. If the Majors and NOC’s decelerate their JV activity and acquisitions amid internal capital budgeting debates, we see a risk to activity from smaller players with limited financing options or the incentive from an end market to sell de-risked reserves, which they are not capitalized to develop.
Flattening North American Rig Count Estimates. To incorporate potential headwinds we are cutting our previous estimate for 18% US rig count growth for 2012 to 9%. Our forecast assumes operators continue to drill to maintain leases and replace reserves, but assumes that growth from well-funded operators is offset by a slowdown in activity from smaller players. Since commodity prices and capital markets have not deteriorated to the same degree as 2008/2009, we do not see a need to be more punitive, but acknowledge the potential downside risk if the economic outlook worsens.
North American Rig Count Revisions
Source: Baker Hughes, Vertical Research Partners
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Negative Implications for North American Pressure Pumping Pressure Pumping Linked to Horizontal Rig Count
Source: Baker Hughes, Vertical Research Partners Pressure Pumping Revenue/Rig
Source: Spears, Company Filings & Presentations, Vertical Research Partners Supply Demand Balance Approaching
Source: Company Filings & Presentations, Vertical Research Partners
Shift to Horizontal Rig Count Maturing
Source: Baker Hughes, Vertical Research Partners Pressure pumping earnings see risk of slower rig count growth. Growth in unconventional plays, horizontal drilling, and the pressure pumping market progressed in concert over the last few years. In our view, shift in the demand curve for pressure pumping horsepower is close to maturity, with the horizontal rig count accounting for 60% of the US land rig count and growth in service intensity per well digested. As the upward shift in pressure pumping horsepower demand absorbed the spare capacity, a resultant shortage of equipment led to pricing power, economic rents, and immense horsepower construction program. We see net capacity in the market doubling between 4Q10 and 4Q12 by our estimation. Given lower barriers to entry and the emergence of new pressure pumping IPO’s like C&J and others in the pipeline, our estimates of capacity additions have a greater upside than downside risk. From our conversations with oil services companies, at the beginning of 2011, North American demand for pressure pumping horsepower was around 12m horsepower and the supply of horsepower was closer to 10m horsepower. Our analysis of horsepower supply suggests the market had 10mm horsepower in 1Q11. The estimate of 12m horsepower of demand equates to a little over 7,000 horsepower per US rig in 1Q11. Based on announced building programs and assumption that all operators will look to maintain market share, the market will reach over 17m of horsepower supplied by the end of 2012. If horsepower demand per rig grows modestly through 2012, the supply of horsepower per rig will reach equilibrium in the middle of 2012, if the US rig count growth slows in line with our forecast. As supply outstrips demand into the second half of the year, we forecast competition from incoming pressure pumping capacity will erode pricing power gained since 2009.
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Darren Gacicia 203.276.5664 ______________
5
De-risking estimates for North American Pressure Pumping Mkt. Share
Source: Spears, Vertical Research Partners Oil Services North American Exposure
Source: Spears, Company Data, Vertical Research Partners US Land vs. International Rig Counts
Source: Baker Hughes, Vertical Research Partners
Lowering our estimates for North America. The collapse of oil service shares due to fear of European debt issues make a bearish call on pressure pumping less heroic, but it allows us to calibrate our estimates and view. From conversations with industry players, we surmise 20% of the increase in pressure pumping revenue between 2009 and 2011 has come from pricing power. In our view, the market will surrender pricing premiums if supply balances demand. We see little support for pricing in long term contracts, which may support utilization for the larger players in the space, but are not structured around fixed pricing. Since we believe that North American rig count growth will accelerate once near term macroeconomic and capital market issues pass, we are not making the assumption that a an oversupply of horsepower yields a crash in North American pressure pumping or North American geographic margins. That said, we are tempering our margin expectations across 2012 to remove recent pricing gains. We see the impetus to spend the remainder of 2011 budgets as supportive of activity through the end of the year, but a deceleration of activity with the arrival of 2012 budgets. Following the lull, we see a recovery of the North American rig count into 2013, under the assumption that current economic and capital market headwinds fade. Please find the details of these assumption changes to our earnings estimates across our coverage on the next page. International outlook remains largely unchanged awaiting further data points. During the 2008/2009 downturn international rig counts fell by 13%, versus ~50% in North America. The magnitude of the negative impact from Europe remains unknown, but the shock to financial markets and degree of the slowdown does not appear as profound as 2008/2009. Capital markets have tightened, but we see this as a bigger problem for smaller, higher risk North American E&P companies than larger international IOCs and NOCs. The exception to the rule may be the emerging class of E&P companies with operations in the UK North Sea and other emerging global basins. That said, cash flow from Brent prices above $100/bbl, the impetus for OPEC to expand spare capacity to maintain order in the oil market, the awaking of upstream spending from NOCs, and strong international offshore rig tendering activity as supportive of the positive trajectory of international activity in our forecast.
Discounting lower growth and more risk in price targets Revised Price Valuation Ranges and Price Targets
Source: Vertical Research Partners
Change in Price Targets
Source: Bloomberg, Vertical Research Partners Relative share performance since 7/22/11
Source: Bloomberg, Vertical Research Partners
Lowering Price Targets for Oil Services Shares. In conjunction with lowering earnings estimates, we imply lower growth in our earnings multiple valuation framework. At the same time, we are transitioning the betas incorporated in our valuation analysis from the five year implied beta to the two year implied beta. The original impetus to use a longer horizon on our beta calculation looked to smooth out some of above average volatility in recent years and reduce the larger differences in implied risk between companies. Given the risk of near term earnings volatility due to economic issues overhanging the sector, we opted to migrate to a two year beta, which better reflects near term uncertainty, potential further downside risks to earnings estimates depending on macroeconomic outcomes, and the probability of greater volatility across oil service shares. As a result, discount rates used in calculating our target multiples have increased, our valuation multiples have come down, and our prices targets are lower. Our new valuation ranges and price targets are illustrated on this page and the methodology is further outlined on pg. 33. We remain bullish on international levered names at current share levels, but anticipate further volatility as unpredictable political and economic forces unfold. We continue to favor companies with leverage to international and offshore activity, with less exposure to funding issues with smaller operators, and better supported by higher Brent prices, positive indications from offshore tendering activity, and demand on OPEC spare capacity. Within this framework, SLB (Buy, PT$110) and BHI (Buy, PT$95) remain our top large cap. picks. DRQ (Buy, PT$90) and NBR (Buy, PT$29) remain our top small.mid cap. picks. We continue to favor RIG (Buy, PT$98), SDRL (Buy, PT$49), and DO (Buy, PT$100) among offshore drillers. North American levered shares should remain volatile. Given the greater exposure to North America, KEG, NBR, PTEN, and HAL experienced the biggest drop in share price since the end of July. We anticipate that these shares will remain volatile, especially those with pressure pumping exposure. Although we are lowering our North America estimates, especially as it related to pressure pumping, current depressed levels in these shares leave us looking for value rather than contemplating downgrades. In the event of progress on the European debt and macro front, we anticipate that these North American names will lead a resultant rally in the sector. Therefore, we see attractive trades brewing for HAL and NBR as the “macro fear” trade abates.
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NBR WFT BHI HAL SLB KEG PTEN DRQ FTI CAM NOV
Implied P/E Valuation Range Price Target Current Px
Company Ticker Rating Price Price Return ($Bn) 2011 2012 2011 2012 Key ThemesBaker Hughes BHI Buy $49 $95 93% $21.5 11.4X 9.1X -1% -7% A laggard during the last cycle, BHI has polished its operating structure. We forecast a reversion to
peer growth and margins, especially in international markets. Near term headwinds from North America and pressure pumping exposure should be largely discounted into shares at these levels.
Schlumberger SLB Buy $63 $110 76% $84.5 16.7X 11.6X -1% 2% Leverage to international, offshore and NOC spending. A technology leader, whose higher value-added services should drive margins, will benefit from an expansion in exploration activity. SLB carries the least exposure to the North American market amongst diversifies oil service companies.Meanwhile, SLB's superior international footprint provides investors excellent leverage to ramp in international activity that will follow as the commodity market tiightens and internation upstream investments accelerates to keep pace with oil and natural gas demand.
Weatherford WFT Buy $13 $27 106% $9.8 16.1X 9.3X -7% -13% As a victim of operating leverage in the downturn leverage during the last downturn, WFT has felt the brunt of the latest dowturn in the market. These same forces will benefit WFT as international upstream spending activity emerges, especially from NOCs, who tend to spend at a lag to other players in the market.
FMC Technologies FTI Buy $40 $60 50% $9.6 23.6X 16.9X -1% 4% Favorable leverage to the offshore market with its subsea business and pressure pumping expansion through its flowline business, with a discounted earnings multiple offers an attractive entry point. We favor FTI's improving fundamentals, grwoth trajectory, and potential earnings visibility.
Cameron International CAM Buy $45 $65 43% $11.1 17.1X 12.0X -1% 1% Investors underestimate the company's leverage to the surface and subsea production equipment and international markets. Given the stock dramatically lagged its peers and screens well on valuation, we see a favorable risk reward amidst low expectations.
Halliburton HAL Buy $33 $60 80% $30.6 9.7X 8.5X 2% -12% Leverage to surging North American and pressure pumping economics may continue to weigh on shares. Given aggressive international growth and margin targets, we see upside once investor's attention turns to international and offshore opportunities.
National Oilwell Varco NOV Hold $59 $80 36% $24.9 13.1X 11.2X -1% -8% As the largest rig equipment provider, NOV rallied strongly with a renewal of land and offshore rig constructions. We forecast strong orders for rig and other oil services equipment, but believe that the shares may reflect those expectations as well. We are biased toward upside in our forecast, but await a better entry point. That said, with a resumption of the rally in oil services shares a trade into the $80's remains a reasonable expectation.
Dril-Quip DRQ Buy $54 $90 65% $2.2 23.5X 13.9X 0% 13% Strong exposure to offshore spending cycle, spare production capacity to capture rising order volumes, trading at a discount to recent market volatility and investor questions about the future of management, after the recent unfortunate passing of two founders. We believe that low expectations for DRQ will turn with the ramping in global offshore activity, especially in the Gulf of Mexico and Brazil. Given visibility for earnings growth and depressed valuation, we are buyers of DRQ shares.
Nabors Industries NBR Buy $13 $29 116% $3.9 8.7X 5.1X 5% 8% Missed earnings expectations and attention to upstream investments will yield attention to stronger international operations, US land drilling, and recovery of smaller business in the portfolio. Screening well on valuation and a laggard of the recent rally in oil services stocks, we like the risk/reward in NBR shares.
Patterson-UTI Energy PTEN Hold $17 $28 65% $2.6 7.4X 6.4X -2% -14% Strong leverage to the North American land drilling and pressure pumping market may contineu to overhang the shares. PTEN must continue to reinvest in new land rigs backed with contracts and maintain utilization for lower-spec. legacy rigs for positive share momentum to return.
Key Energy Services KEG Hold $10 $16 64% $1.5 9.7X 5.8X 2% -5% Well servicing, coiled tubing, and fluids management look set to drive positive economics from the rise of unconventional plays is North American and International markets. As estimates capture the positive outlook and risks are emerging for North American growth and increased equipment supply, we have become more guarded in our optimism.
Target Exp.Mkt. Cap. P/NAV P/NAV
Company Ticker Rating Price Price Return ($Bn) 2011 2012 2011 2012 Key ThemeTransocean RIG Buy $46 $98 111% $14.9 62% 59% -4% 20% Rig availability across deepwater floaters, midwater floaters, and jackups leaves room to capture
upside above our estimates. Ultimately, we see upside from the transition to a fuller payout model, which should re-rate shares on a yield basis from a discount to NAV to a premium to NAV.
Seadrill SDRL Buy $29 $49 69% $13.6 161% 150% -8% 2% Contract rollover and uncontracted deepwater newbuilds should benefit this shrewd and aggressive contractor. Rising cash flows should drive higher distributions, which should press the shares price higher relative to its yield-based valuation.
Diamond Offshore DO Buy $56 $100 79% $7.8 59% 58% 2% 21% Deepwater and midwater floater availability will allow DO to capture rising dayrates. In combination with cash flows from newbuilds, rising dividend distributions over the course of the cycle, may rerate the shares from a P/NAV discount to a premium on a yield basis. Current fleet age and quality questions will fade as rising demand with the upstream cycle brings rigs back to work.
Hercules Offshore HERO Buy $3 $10 261% $0.4 62% 55% -9% -65% Shares reflect poor sentiment for commodity jackups and few prospects for the shallow water Gulf of Mexico (GoM). A return of permitting and moderate recovery in shallow water jackup demand, given limited jackup supply in the GoM, will help utilization, dayrates, commodity rig values, and HERO shares.
Rowan RDC Buy $31 $52 68% $4.0 63% 57% 6% 15% We like RDC shares at a discount to NAV, with the prospects of open premium jackup capacity in a tightening high-spec. jackup market, and non-core business divestitures freed to reinvest into an expansion into the deepwater rig market.
Atwood Oceanics ATW Hold $36 $52 46% $2.3 78% 70% 0% 5% Solid operator, with an impetus to maintain leverage to the business through fleet expansion, and upside from rising rig values, but seeking a better entry point.
Noble NE Hold $30 $47 59% $7.5 83% 78% 0% 15% Good exposure to the contract drilling business and leverage to growth through an extensive newbuild program, which appears to have corrected recent issues with rigs under construction, but trading at NAV leaving less upside relative to other offshore drillers.
ENSCO ESV Hold $41 $63 53% $9.5 #REF! #REF! -13% -2% Quality jackup fleet will capture the rising tide in rates and the potential to unlock value in PDE assets through future contracting paint a positive picture that largely captured at the current P/NAV. A potential upside catalyst may come with the expansion of their dividend payout strategy.
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Darren Gacicia 203.276.5664 ______________
9
Global Rig Counts
International Oil/Gas Breakdown Source: Baker Hughes
Oil Gas M/M MixSep-11 Aug-11 M/M Y/Y YTD % Peak Sep-11 Aug-11 M/M Y/Y YTD % Peak Oil Gas Oil Gas
Owner Rig Name Shipyard Country Market CategoryWater Depth Type
Order Date
Cost ($MM)
Deliv. Date
Deliv. Year Term Contract
1 Atwood Atwood Mako PPL Shipyard Singapore JU 361-400-IC 400 IC Oct-10 190$ Sep-12 20122 Atwood Atwood Manta PPL Shipyard Singapore JU 361-400-IC 400 IC Oct-10 190$ Dec-12 20123 Atwood Atwood Orca PPL Shipyard Singapore JU 361-400-IC 400 IC Jan-11 190$ Jun-13 20134 CPTDC CPTDC JU Tbn1 CPLEC China JU 300-IC 300 IC Oct-09 May-12 20125 Deepwater Drilling & Services Dynamic Vision Keppel FELS Singapore JU 301-360-IC 350 IC May-11 180$ Feb-13 2013 ONGC6 Drilling & Offshore Drilling & Offshore JU Tbn1 ABG Shipyard India JU Harsh High Spec 350 IC Nov-10 220$ Oct-13 20137 Drilling & Offshore Drilling & Offshore JU Tbn2 ABG Shipyard India JU Harsh High Spec 350 IC Nov-10 220$ Jun-14 20148 Ensco ENSCO JU Tbn1 Keppel FELS Singapore JU Harsh High Spec 400 IC Feb-11 230$ May-13 20139 Ensco ENSCO JU Tbn2 Keppel FELS Singapore JU Harsh High Spec 400 IC Feb-11 230$ Nov-13 2013
10 Ensco ENSCO JU Tbn3 Keppel FELS Singapore JU Harsh High Spec 400 IC Oct-11 260$ Aug-14 201411 Essar Oilfields Services Essar JU Tbn1 ABG Shipyard India JU 301-360-IC 350 IC Oct-08 229$ Jun-12 201212 Essar Oilfields Services Essar JU Tbn2 ABG Shipyard India JU 301-360-IC 350 IC Oct-08 229$ Jul-12 201213 Eurasia Drilling Eurasia Drilling JU Tbn1 Lamprell UAE JU 250-IC 250 IC Oct-10 210$ Apr-13 201314 Gazflot Arkticheskaya Zvezdochka Shipyard Russia JU 301-360-IC 328 IC Mar-95 100$ Nov-11 2011 Gazflot15 Great Offshore Great Offshore JU V351 Bharati Shipyard India JU 301-360-IC 350 IC Aug-06 165$ Apr-12 201216 Greatship Greatdrill Chaaya Lamprell UAE JU 301-360-IC 350 IC Feb-11 160$ Dec-12 2012 ONGC17 Gulf Drilling International GDI JU Tbn1 Keppel FELS Singapore JU 301-360-IC 350 IC May-11 197$ Aug-13 201318 Gulf Drilling International GDI JU Tbn2 Keppel FELS Singapore JU 301-360-IC 350 IC May-11 197$ Sep-14 201419 Hercules Offshore Discovery Offshore JU Tbn1 Keppel FELS Singapore JU Harsh High Spec 400 IC Jan-11 231$ Jun-13 201320 Hercules Offshore Discovery Offshore JU Tbn2 Keppel FELS Singapore JU Harsh High Spec 400 IC Jan-11 231$ Nov-13 201321 Japan Drilling Hakuryu-11 Keppel FELS Singapore JU >400-IC 425 IC Mar-11 210$ Mar-13 201322 Jasper Offshore Jasper Adventurer Keppel FELS Singapore JU 361-400-IC 400 IC Dec-10 180$ Nov-12 201223 Jasper Offshore Jasper Beacon Keppel FELS Singapore JU 361-400-IC 400 IC Apr-11 180$ May-13 201324 KS Energy KS JU Tbn1 COSCO Nantong China JU 361-400-IC 400 IC May-11 194$ Sep-13 201325 KS Energy KS JU Tbn2 COSCO Nantong China JU 361-400-IC 400 IC May-11 194$ Mar-14 201426 Maersk Drilling Maersk JU Tbn1 Keppel FELS Singapore JU Harsh High Spec 492 IC Feb-11 500$ Nov-13 2013 Operator Tba27 Maersk Drilling Maersk JU Tbn2 Keppel FELS Singapore JU Harsh High Spec 492 IC Feb-11 500$ Jul-14 201428 Maritime Industrial Services MIS JU Hull 108 Maritime Industrial Services UAE JU 300-IC 300 IC May-07 184$ Mar-12 201229 Mosvold Middle East Jackup Haffar I Maritime Industrial Services UAE JU 300-IC 300 IC May-07 184$ Oct-11 2011 PEMEX30 National Drilling Makhasib Lamprell UAE JU <250-IC 200 IC Jul-10 159$ May-12 201231 National Drilling Muhaiyimat Lamprell UAE JU <250-IC 200 IC Jul-10 159$ Sep-12 201232 Noble Noble JU Tbn1 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Dec-10 220$ Dec-12 201233 Noble Noble JU Tbn2 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Dec-10 220$ Jun-13 201334 Noble Noble JU Tbn3 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Mar-11 235$ Sep-13 201335 Noble Noble JU Tbn4 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Mar-11 235$ Feb-14 201436 Noble Noble JU Tbn5 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Aug-11 245$ Aug-14 201437 Noble Noble JU Tbn6 Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 400 IC Aug-11 245$ Nov-14 201438 North Atlantic Drilling West Linus Jurong Shipyard Pte Ltd Singapore JU Harsh High Spec 492 IC Mar-11 530$ Sep-13 2013 ConocoPhillips39 Operadora Cicsa Independencia 1 Operadora Cicsa Mexico JU 361-400-IC 400 IC Jul-07 195$ Sep-11 201140 Perforadora Central Papaloapan Keppel AmFELS USA JU 361-400-IC 375 IC Feb-11 195$ Jan-13 201341 Petrobras P-59 Sao Roque do Paraguacu Brazil JU 301-360-IC 350 IC Sep-08 Jan-12 2012 Petrobras42 Petrobras P-60 Sao Roque do Paraguacu Brazil JU 301-360-IC 350 IC Sep-08 May-12 2012 Petrobras43 Prospector Offshore Drilling Prospector JU Tbn1 Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Dec-10 206$ Nov-12 201244 Prospector Offshore Drilling Prospector JU Tbn2 Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Dec-10 206$ Jan-13 201345 Prospector Offshore Drilling Prospector JU Tbn3 Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Apr-11 220$ Aug-13 201346 Prospector Offshore Drilling Prospector JU Tbn4 Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Apr-11 220$ Sep-13 201347 Prospector Offshore Drilling Prospector JU Tbn5 Shanghai Waigaoqiao Shipbuildin China JU 361-400-IC 400 IC Aug-11 211$ Feb-14 201448 Prospector Offshore Drilling Prospector JU Tbn6 Shanghai Waigaoqiao Shipbuildin China JU 361-400-IC 400 IC Aug-11 211$ May-14 201449 Rowan Joe Douglas LeTourneau USA JU 361-400-IC 400 IC Mar-08 257$ Dec-11 2011 McMoRan50 Saudi Aramco Saudi Aramco JU Tbn1 Keppel FELS Singapore JU 300-IC 300 IC Jan-10 Sep-12 2012 Saudi Aramco51 Seadrill AOR1 Keppel FELS Singapore JU 361-400-IC 400 IC Dec-10 206$ Feb-13 201352 Seadrill AOR2 Keppel FELS Singapore JU 361-400-IC 400 IC Dec-10 206$ Mar-13 201353 Seadrill AOR3 Keppel FELS Singapore JU 361-400-IC 400 IC Jun-11 189$ Aug-13 201354 Seadrill West Castor Jurong Shipyard Pte Ltd Singapore JU 361-400-IC 400 IC Oct-10 200$ Dec-12 201255 Seadrill West Oberon Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Nov-10 190$ Mar-13 201356 Seadrill West Telesto Dalian Shipbuilding Industry Co. China JU 361-400-IC 400 IC Nov-10 190$ Dec-12 201257 Seadrill West Tucana Jurong Shipyard Pte Ltd Singapore JU 361-400-IC 400 IC Oct-10 200$ Mar-13 201358 Standard Drilling Standard JU Tbn5 Keppel FELS Singapore JU 361-400-IC 400 IC Nov-10 185$ Jul-12 201259 Standard Drilling Standard JU Tbn6 Keppel FELS Singapore JU 361-400-IC 400 IC Jan-11 184$ Feb-13 201360 Standard Drilling Standard JU Tbn7 Keppel FELS Singapore JU 361-400-IC 400 IC Jan-11 184$ Jun-13 201361 Standard Drilling Standard JU Tbn8 Keppel FELS Singapore JU 361-400-IC 400 IC May-11 196$ Jul-13 201362 Standard Drilling Standard JU Tbn9 Keppel FELS Singapore JU 361-400-IC 400 IC May-11 196$ Nov-13 201363 Standard Drilling Standard JU Tbn10 Keppel FELS Singapore JU 361-400-IC 400 IC May-11 196$ Dec-13 201364 Standard Drilling Standard JU Tbn11 Keppel FELS Singapore JU 361-400-IC 400 IC May-11 196$ May-14 201465 Transocean Transocean Honor PPL Shipyard Singapore JU 361-400-IC 400 IC Nov-09 195$ Nov-11 201166 Transocean Transocean JU Tbn2 Keppel FELS Singapore JU 301-360-IC 350 IC Feb-11 200$ Dec-12 2012 Chevron67 Transocean Transocean JU Tbn3 Keppel FELS Singapore JU 301-360-IC 350 IC Feb-11 200$ Jun-13 2013 Chevron68 Transocean Transocean JU Tbn4 Keppel FELS Singapore JU 361-400-IC 400 IC Aug-11 195$ Jul-13 2013 Chevron69 Vietsovpetro Tam Dao 03 PV Shipyard Vietnam JU 300-IC 300 IC Jan-09 180$ Mar-12 2012 Vietsovpetro70 Vietsovpetro Vietsovpetro JU Tbn3 JU 361-400-IC 400 IC 201471 Yantai Raffles Caspian Driller Yantai CIMC Raffles China JU 300-IC 300 IC Dec-09 Mar-12 2012 Dragon Oil72 Yantai Raffles Yantai Raffles JU Tbn3 Yantai CIMC Raffles China JU 300-IC 300 IC Apr-08 Oct-11 201173 ZPMC Zhenhai 1 ZPMC Nantong China JU 361-400-IC 400 IC Jun-11 Apr-13 2013
Darren Gacicia 203.276.5664 ______________
Vertical Research Partners
21
Floater Fleet Expansion Floater Newbuild Order Book
Source: ODS Petrodata, Vertical Research Partners
Owner Rig Name Shipyard Country Market CategoryWater Depth Type
Order Date
Cost ($MM)
Deliv. Date
Deliv. Year
Term Contract
1 Vantage Drilling Dalian Developer COSCO Dalian China Drillship >7500 10,000 Apr-06 Dec-12 20122 Atw ood Atw ood Advantage Daew oo South Korea Drillship >7500 10,000 Jan-11 600$ Sep-13 20133 Atw ood Atw ood Condor Jurong Shipyard Pte Ltd Singapore Semi >7500 10,000 Jul-08 750$ Jun-12 20124 CNOOC Hai Yang Shi You 981 Shanghai Waigaoqiao Shipbuilding China Semi 5001-7500 7,500 Dec-06 599$ Oct-11 2011 CNOOC5 COSL COSLInnovator Yantai CIMC Raffles China Semi Harsh High Spec 1,640 Apr-06 460$ Dec-11 2011 Statoil6 COSL COSLPromoter Yantai Raff les China Semi Harsh High Spec 1,640 Jan-07 460$ Mar-12 2012 Statoil7 Diamond Offshore Ocean BlackHaw k Hyundai Heavy Industries South Korea Drillship >7500 12,000 Jan-11 590$ Jun-13 2013 Anadarko8 Diamond Offshore Ocean BlackHornet Hyundai Heavy Industries South Korea Drillship >7500 12,000 Feb-11 590$ Dec-13 2013 Anadarko9 Diamond Offshore Ocean BlackRhino Hyundai Heavy Industries South Korea Drillship >7500 12,000 May-11 610$ May-14 2014
10 Dolphin Fred Olsen Drsh Tbn1 Hyundai Heavy Industries South Korea Drillship >7500 12,000 Apr-11 615$ Sep-13 201311 Ensco ENSCO 8505 Keppel FELS Singapore Semi >7500 8,500 May-08 537$ Jan-12 201212 Ensco ENSCO 8506 Keppel FELS Singapore Semi >7500 8,500 Aug-08 560$ Jul-12 201213 Ensco ENSCO DS-6 Samsung Heavy Industries South Korea Drillship >7500 10,000 Aug-08 790$ Dec-11 201114 Ensco ENSCO DS-7 Samsung Heavy Industries South Korea Drillship >7500 10,000 Dec-10 600$ Jul-13 201315 Etesco Etesco Takatsugu J Samsung Heavy Industries South Korea Drillship >7500 10,000 Jul-08 820$ Jan-12 2012 Petrobras16 Gazflot Polyarnaya Zvezda Vyborg Shipyard Russia Semi Harsh High Spec 1,148 Nov-07 Sep-11 2011 Gazflot17 Gazflot Severnoye Siyanie Vyborg Shipyard Russia Semi Harsh High Spec 1,148 Nov-07 Sep-11 2011 Gazflot18 IPC La Muralla IV Daew oo South Korea Semi >7500 10,000 Aug-08 709$ Sep-11 201119 Island Offshore Island Innovator COSCO Nantong China Semi Harsh High Spec 2,300 Mar-07 560$ Mar-12 201220 Maersk Drilling Maersk Drsh Tbn1 Samsung Heavy Industries South Korea Drillship >7500 12,000 Apr-11 650$ Aug-13 201321 Maersk Drilling Maersk Drsh Tbn2 Samsung Heavy Industries South Korea Drillship >7500 12,000 Apr-11 650$ Nov-13 201322 Maersk Drilling Maersk Drsh Tbn3 Samsung Heavy Industries South Korea Drillship >7500 12,000 Jul-11 650$ May-14 201423 Maersk Drilling Maersk Drsh Tbn4 Samsung Heavy Industries South Korea Drillship >7500 12,000 Jul-11 650$ Aug-14 201424 Noble Noble Bully I Shanghai Shipyard China Drillship >7500 12,000 Oct-07 610$ Dec-11 2011 Shell25 Noble Noble Bully II Shanghai Shipyard China Drillship >7500 12,000 Dec-07 632$ Nov-11 2011 Shell26 Noble Noble Drsh Tbn5 Hyundai Heavy Industries South Korea Drillship >7500 10,000 Jan-11 605$ Jun-13 2013 Shell27 Noble Noble Drsh Tbn6 Hyundai Heavy Industries South Korea Drillship >7500 10,000 Jan-11 605$ Dec-13 201328 Noble Noble Drsh Tbn7 Hyundai Heavy Industries South Korea Drillship >7500 10,000 Mar-11 615$ May-14 201429 Noble Noble Drsh Tbn8 Hyundai Heavy Industries South Korea Drillship >7500 10,000 Sep-11 630$ Sep-14 201430 Noble Noble Globe Trotter STX Offshore & Shipbuilding China Drillship >7500 10,000 Sep-08 585$ Dec-11 2011 Shell31 Noble Noble Globe Trotter 2 STX Offshore & Shipbuilding China Drillship >7500 10,000 Jun-10 550$ Jun-13 2013 Shell32 Ocean Rig OCR Drillship Tbn1 Samsung Heavy Industries South Korea Drillship >7500 12,000 Apr-11 638$ Jul-13 201333 Ocean Rig OCR Drillship Tbn2 Samsung Heavy Industries South Korea Drillship >7500 12,000 Apr-11 638$ Oct-13 201334 Ocean Rig OCR Drillship Tbn3 Samsung Heavy Industries South Korea Drillship >7500 12,000 Jun-11 638$ Nov-13 201335 Odebrecht Odebrecht Drsh Tbn5 Daew oo South Korea Drillship >7500 10,000 Dec-10 May-13 201336 Odebrecht Odebrecht Semi Tbn1 Daew oo South Korea Semi Harsh Deepw ater 10,000 Dec-10 Oct-13 201337 Odebrecht ODN I Daew oo South Korea Drillship >7500 10,000 Dec-09 579$ Jan-12 2012 Petrobras38 Odebrecht ODN II Daew oo South Korea Drillship >7500 10,000 Dec-09 579$ Mar-12 2012 Petrobras39 Odfjell Drilling Deepsea Metro II Hyundai Heavy Industries South Korea Drillship >7500 10,000 Jun-08 668$ Nov-11 2011 Petrobras40 Opus Offshore Opus Drsh Tbn1 Shanghai Shipyard China Drillship <=3000 3,000 Sep-11 Mar-14 201441 Opus Offshore Opus Drsh Tbn2 Shanghai Shipyard China Drillship <=3000 3,000 Sep-11 Sep-14 201442 Pacif ic Drilling Pacif ic Khamsin Samsung Heavy Industries South Korea Drillship >7500 10,000 Mar-11 550$ Apr-13 201343 Pacif ic Drilling Pacif ic Santa Ana Samsung Heavy Industries South Korea Drillship >7500 10,000 Mar-08 650$ Dec-11 2011 Chevron44 Pacif ic Drilling Pacif ic Sharav Samsung Heavy Industries South Korea Drillship >7500 10,000 Mar-11 550$ Sep-13 201345 Petroserv SSV Catarina Daew oo South Korea Semi >7500 10,000 Dec-09 526$ Apr-12 201246 Queiroz Galvao Amaralina Star Samsung Heavy Industries South Korea Drillship >7500 10,000 Nov-10 Jul-12 2012 Petrobras47 Queiroz Galvao Laguna Star Samsung Heavy Industries South Korea Drillship >7500 10,000 Nov-10 Sep-12 2012 Petrobras48 Row an Row an Drsh Tbn1 Hyundai Heavy Industries South Korea Drillship >7500 12,000 Jun-11 740$ Sep-13 201349 Row an Row an Drsh Tbn2 Hyundai Heavy Industries South Korea Drillship >7500 12,000 Jun-11 738$ Dec-13 201350 Saipem Scarabeo 8 Fincantieri Italy Semi Harsh Deepw ater 9,843 Jun-05 615$ Dec-11 2011 Eni51 Schahin Cerrado Samsung Heavy Industries South Korea Drillship >7500 10,000 Jun-08 682$ Oct-11 2011 Petrobras52 Schahin Sertao Samsung Heavy Industries South Korea Drillship >7500 10,000 Jun-08 709$ Nov-11 2011 Petrobras53 Seadrill West Auriga Samsung Heavy Industries South Korea Drillship >7500 12,000 Nov-10 595$ Feb-13 201354 Seadrill West Capricorn Jurong Shipyard Pte Ltd Singapore Semi 5001-7500 7,500 May-08 771$ Dec-11 201155 Seadrill West Leo Jurong Shipyard Pte Ltd Singapore Semi >7500 10,000 Jun-06 510$ Dec-11 201156 Seadrill West Tellus Samsung Heavy Industries South Korea Drillship >7500 12,000 Apr-11 600$ Aug-13 201357 Seadrill West Vela Samsung Heavy Industries South Korea Drillship >7500 12,000 Nov-10 595$ May-13 201358 Sete Brasil Sete Brasil Drsh Tbn1 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jan-15 2015 Petrobras59 Sete Brasil Sete Brasil Drsh Tbn2 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jul-15 2015 Petrobras60 Sete Brasil Sete Brasil Drsh Tbn3 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jan-16 2016 Petrobras61 Sete Brasil Sete Brasil Drsh Tbn4 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jul-16 2016 Petrobras62 Sete Brasil Sete Brasil Drsh Tbn5 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jan-17 2017 Petrobras63 Sete Brasil Sete Brasil Drsh Tbn6 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jul-17 2017 Petrobras64 Sete Brasil Sete Brasil Drsh Tbn7 Estaleiro Atlantico Sul Brazil Drillship >7500 10,000 Feb-11 662$ Jan-18 2018 Petrobras65 Sevan Drilling Sevan Brasil COSCO Nantong China Semi >7500 10,000 Jun-08 685$ Mar-12 2012 Petrobras66 Sevan Drilling Sevan UDW3 COSCO Nantong China Semi >7500 10,000 May-11 526$ Dec-13 201367 Sevan Drilling Sevan UDW4 COSCO Nantong China Semi >7500 10,000 May-11 526$ May-14 201468 Songa Offshore Songa Semi Tbn2 Daew oo South Korea Semi Harsh High Spec 1,640 Jul-11 565$ Feb-14 2014 Statoil69 Songa Offshore Songa Semi Tbn3 Daew oo South Korea Semi Harsh High Spec 1,640 Jul-11 565$ Aug-14 2014 Statoil70 Stena Stena DrillMAX ICE Samsung Heavy Industries South Korea Drillship >7500 7,500 Apr-08 1,150$ Feb-12 201271 TMT DragonQuest Daew oo South Korea Drillship >7500 10,000 Dec-07 782$ Oct-11 2011 Petrobras72 Transocean Aker Drsh Tbn1 Daew oo South Korea Drillship >7500 12,000 Jan-11 600$ Oct-13 201373 Transocean Aker Drsh Tbn2 Daew oo South Korea Drillship >7500 12,000 Jan-11 600$ Dec-13 201374 Vantage Drilling Tungsten Explorer Daew oo South Korea Drillship >7500 12,000 May-11 590$ May-13 2013
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