Morgan Stanley has looked at the sector and sites the likely decline of rates as a reason to be more conservative about the sector. $ 100 oil is not a sufficient offset to the new rigs competing in the same markets.
- Bearish talk about offshore drillers has abounded recently (I, II, III, IV), and Atwood Oceanics (ATW) latest quarterly results won’t ease those concerns, Morgan Stanley says.
- The firm is now modeling a rollover at $400K/day on ATW’s next rig to rollover in Equatorial Guinea in Aug. 2014, down substantially from the rig’s current dayrate of $516K/day (fixed in July 2013), as it sees increased competition in securing new work.
- ATW does remain positioned to deliver steady earnings growth, the firm says, and beyond well-documented near-term floater market choppiness it still forecasts marketed utilization to pick up in 2015.
- ATW (-2.1%) results pulled down other offshore players: HERO -7.9%, DO-3.2%, NE -2%, RIG -1.9%, SDRL -1.8%, ESV -1.6%, RDC -0.9%.