Contrary to the perception created by media reports because of the BP (NYSE:BP) deepwater oil disaster, offshore drilling in deep waters remains vibrant, and is in fact growing, and Oceaneering International (NYSE:OII) is strongly positioned to profit from that reality over the next decade says Barclays (NYSE:BCS).
There has been a plethora of deepwater deals cut in the midst of the BP disaster, underscoring the demand for oil which won't be hindered by any type of accident, even one as large as BP's.
Barclays said, "We believe that Oceaneering International is well positioned to benefit from the secular growth in deep-water drilling and subsea completions that we forecast over the coming decade. Given its unique franchise and long-term visibility in its markets, we believe Oceaneering should trade at a meaningful premium to the oil service group."
"We are increasing our earnings per share estimates for 2011 and 2012 to $3.80 and $4.40 from $3.45 and $4.05. The company's guidance for 2011 is $3.45 to $3.75."
Oceaneering International soared on Monday, closing at $63.77, gaining $1.90, or 3.07 percent. Barclays raised their price target on Oceaneering from $58 to $70. They maintain an "Overweight" on them.
Showing posts with label Oceaneering International. Show all posts
Showing posts with label Oceaneering International. Show all posts
Tuesday, November 2, 2010
Tuesday, October 26, 2010
Wells Fargo (NYSE:WFC) Initiates Coverage on Key Energy (NYSE:KEG), Oceaneering (NYSE:OII), Drill-Quip (Nasdaq:DRQ), National Oilwell (NYSE:NOV)
A number of financial institutions launched coverage on a number of energy companies, and Wells Fargo (NYSE:WFC) initiated coverage on Key Energy Services, Inc (NYSE:KEG), Oceaneering International, Inc. (NYSE:OII), Drill-Quip, Inc. (Nasdaq:DRQ) and National Oilwell Varco, Inc. (NYSE:NOV).
On Key Energy Services, which Wells started off with a "Market Perform," they said, "We like KEG's transformation strategy and initial focus on heavy duty, workover rigs, and large-diameter, coiled tubing units. Legacy U.S. rigs should benefit from a 10%+ rise in flowing oil wells over the next 18 months. Finally, it's pushing into new foreign markets, like Colombia and MENA. But, it's pricing in credit for much of this and, before considering higher multiples, we'd prefer to see more results."
They have a valuation range of $10.70 to $11.25 on Key Energy.
On National Oilwell Varco, they were started with an "Outperform" by Wells.
They said, "NOV's narrative has shifted from one plotline--the global rig construction boom - to several, some underappreciated in our view. While an encore of the '05-08 frenzy is unlikely, newbuilding has strong, secular drivers across asset types that are spurring a pick-up, with Petrobrás about to move on its first 9 floaters, and U.S. contractors regrowing shale-oriented fleets; and should ensure an ongoing, healthy flow. But, NOV also 1) is the best positioned in the rig equipment aftermarket; 2) has grown its exposure to FPSOs; 3) should make more $500MM+ acquisitions."
A valuation of $63.00 to $65.00 was placed on them.
Drill-Quip, Inc. was started off with a "Market Perform" rating.
Wells said about them, "The purest, deepwater capital equipment play, DRQ is a well run manufacturer that, over a 2011-12 expected upturn in floater activity, should generate highly competitive earnings growth and returns. Beyond 2012, it's well positioned for Petrobras' planned 20+ newbuilds, and continued, general secular growth. DRQ's valuation premium is warranted and largely reflects its appeal as takeover target. However, we presently find the stock fairly valued and await a better entry point."
A valuation range of $66.00 to $71.00 was placed on them by Wells.
Oceaneering Int'l was launched with an "Outperform by Wells Fargo.
"OII offers compelling risk-reward. We think potential variance to its expected U.S. Gulf of Mexico earnings is skewed to the upside. Globally, the floater fleet should expand by 61 new units and shift towards a more equal balance between exploration and development. Both factors should fuel ROVs and Subsea Products growth. Finally, OII should use its ample fire power continue to return cash, most likely via share repurchases, and make accretive, if likely tiny, acquisitions."
A valuation range of $63.00 to $66.00 was appointed by Wells on Oceanering.
On Key Energy Services, which Wells started off with a "Market Perform," they said, "We like KEG's transformation strategy and initial focus on heavy duty, workover rigs, and large-diameter, coiled tubing units. Legacy U.S. rigs should benefit from a 10%+ rise in flowing oil wells over the next 18 months. Finally, it's pushing into new foreign markets, like Colombia and MENA. But, it's pricing in credit for much of this and, before considering higher multiples, we'd prefer to see more results."
They have a valuation range of $10.70 to $11.25 on Key Energy.
On National Oilwell Varco, they were started with an "Outperform" by Wells.
They said, "NOV's narrative has shifted from one plotline--the global rig construction boom - to several, some underappreciated in our view. While an encore of the '05-08 frenzy is unlikely, newbuilding has strong, secular drivers across asset types that are spurring a pick-up, with Petrobrás about to move on its first 9 floaters, and U.S. contractors regrowing shale-oriented fleets; and should ensure an ongoing, healthy flow. But, NOV also 1) is the best positioned in the rig equipment aftermarket; 2) has grown its exposure to FPSOs; 3) should make more $500MM+ acquisitions."
A valuation of $63.00 to $65.00 was placed on them.
Drill-Quip, Inc. was started off with a "Market Perform" rating.
Wells said about them, "The purest, deepwater capital equipment play, DRQ is a well run manufacturer that, over a 2011-12 expected upturn in floater activity, should generate highly competitive earnings growth and returns. Beyond 2012, it's well positioned for Petrobras' planned 20+ newbuilds, and continued, general secular growth. DRQ's valuation premium is warranted and largely reflects its appeal as takeover target. However, we presently find the stock fairly valued and await a better entry point."
A valuation range of $66.00 to $71.00 was placed on them by Wells.
Oceaneering Int'l was launched with an "Outperform by Wells Fargo.
"OII offers compelling risk-reward. We think potential variance to its expected U.S. Gulf of Mexico earnings is skewed to the upside. Globally, the floater fleet should expand by 61 new units and shift towards a more equal balance between exploration and development. Both factors should fuel ROVs and Subsea Products growth. Finally, OII should use its ample fire power continue to return cash, most likely via share repurchases, and make accretive, if likely tiny, acquisitions."
A valuation range of $63.00 to $66.00 was appointed by Wells on Oceanering.
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