Canaccord Genuity on Energy/Oilfield Services: Strong Demand and Limited Supply Increasing Offshore Day Rates

Canaccord Genuity on Energy/Oilfield Services: Strong Demand and Limited Supply Increasing Offshore Day Rates

Analyst, Scott Burk, said, "We are raising our day rate expectations for 2012 and 2013. We expect robust offshore demand as long as oil prices remain above $80/bbl (Canaccord long-term Brent oil price assumptions are $100/bbl Brent), but are concerned about the ramp-up in newbuild deliveries in 2013/14."

"We continue to favor Atwood Oceanics (NYSE: ATW) and Ensco plc (NYSE: ESV) for their strong growth profiles through 2014, attractive valuations and ESV’s dividend yield. Although up 19% and 20%, respectively, both have underperformed their peers YTD. We believe Transocean (NYSE: RIG) seems to be the most over-bought (up 40% YTD) after recent upside on 2012 EPS increases and the nearness of a Macondo settlement."

For ATW, Canaccord raises FY12/14 EPS from $3.77/$4.89/$6.09 to $3.84/$4.97/$6.38. Price target increased from $55 to $57. (Buy-rated)

For Diamond Offshore (NYSE: DO), FY12/13 from $4.53/$5.07 to $4.62/$5.39. PT raised from $71 to $73. (Hold)

For ESV, FY12/13 from $5.55/$7.08 to $5.82/$7.50. PT raised from $75 to $79. (Buy)

For Noble (NYSE: NE), FY12/13 from $2.86/$3.72 to $3.20/$4.41. PT raised from $39 to $44. (Hold)

For RIG, FY12/13 from $3.54/$4.64 to $3.55/$4.87. PT maintained at $60. (Hold)

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