Seadrill Inks Major Deal With Russians; Good News For All Drillers
This deal bodes well for RIG!
Over the weekend, Seadrill (SDRL) and North Atlantic Drilling (NADL) announced a mega deal with Russia’s Rosneft that has sent the shares of the two companies soaring.
According to the joint press release from North Atlantic Drilling and Seadrill, which owns 70% of North Atlantic, North Atlantic will sign contacts for up to nine offshore rigs, and also enter the onshore drilling market in Russia. Rosneft is also acquiring a big stake in North Atlantic Drilling, although Seadrill will remain the majority owner.
Morgan Stanley’s Ole Slorer and team think the Seadrill/North Atlantic Drilling/Rosneft deal is good not just for the two drillers, but the entire industry:
While the Rosneft contracts are particularly bullish for North Atlantic Drilling / Seadrill, we view the reduction in near term rig availability as an important turning point for the entire offshore driller space. We expect further contract signings in Brazil and West Africa to help reverse current beaten down sentiment, and although some of these contracts undoubtedly will come with comparatively poor rates, the mere fact that we are again in the process of reducing availability should be sufficient for the offshore drillers to catch a bid.