Three shares have a crown target price: E24

Brokerage firms continue to massacre heavy rig companies in the wake of the extreme drop in oil prices, which will stun oil company investments.

For rig companies, which mine oil, several contracts have either been terminated or significantly reduced in recent weeks, and the worst will be, according to Norwegian analysts.

New wave of overtime deals

Danske Bank Markets now recommends investors to remove a number of drilling equipment companies in a recent analysis, downgrading, among other things, Tor Olav Trøims Borr Drilling to a sales recommendation.

So far this year, the platform’s shares have fallen more than 90% on the Oslo Stock Exchange at a price of NOK 5.7, but Danske Bank believes that the disadvantage is considerably greater and has set a new target price of a crown.

John Fredriksen’s Seadrill already has a sales recommendation, but here too the target price drops to a penny. The action is Wednesday at NOK 5.6 on the Oslo Stock Exchange.

Negative cash flow, liquidity challenges and rising mortgages are among the factors that will characterize platform companies for years to come, the brokerage believes, writing that a new wave of overtime offers seems inevitable. .

This is what Danske Bank’s recommendations look like in the platform sector now:

• Awilco Drilling’s sales recommendation is repeated, while the target price drops to NOK 1.
• Drill Drilling’s recommendation is lowered for equipment sale, while the target price is lowered to NOK 1.
• Maersk Drilling’s recommendation is lowered to withhold from purchase, while the target price is reduced to DKK 150.
• Odfjell Drilling’s buy recommendation remains, while the target price drops to NOK 10.
• Seadrill’s recommendation remains on sale, while the target price drops to NOK 1.
• The brokerage has a buy recommendation in the North Ocean with a target price of NOK 10.

Danske Bank believes that consensus estimates in the sector will drop significantly and is even 80 percent below the Factset consensus for ebitda in 2021 and 2022. They believe that market expectations will drop significantly.

Bankruptcy proceedings are pending in the near future.

Several platform companies are struggling with increasing debt.

In a platform update on Tuesday afternoon, DNB Markets titled “The End of Drillers As We Know Them” that a cocktail featuring, among other things, low oil prices, destruction of rig demand, Contract terminations and unsustainable debt levels are likely to force multiple companies to implement the Chapter or Restructuring 11 bankruptcy process in the coming months.

From Norwegian drilling companies, Seadrill and Borr Drilling are expected to exit the process first, according to the brokerage.

Brokerage expects the industry to return after this development, but it needs significant scrapping of modern platforms and consolidation.

Rystad Energy now forecasts that up to ten percent of the contract volume for platform companies will be terminated this year and next, according to an analysis. This is equivalent to an income reduction of approximately $ 3 billion, or more than $ 30 billion.