Skip to main content

Market Overview

Offshore Drillers In 'Game Of Survival'


In a new report, Barclays analyst David Andersin discusses the bleak outlook for offshore drillers. According to Anderson, investors can't bank on a spike in oil prices to be the saving grace for drillers.

"It's a game of survival in Offshore Drilling and we can't see the downward trajectory of offshore upstream spending improving over the next two years, even if oil moves back above $50/bbl by year-end," Anderson explains.

Related Link: Dry Bulk CEO Warns Of Coming Bankruptcies

Between now and 2017, he sees liquidity as the primary focus for offshore drillers. Oil majors across the board have been adopting a strategy of delaying and cancelling any long-term projects, especially exploratory drilling.

Overall, Barclays is “extremely cautious” on offshore drilling stocks, but Anderson notes that the firm sees the most potential downside to Underweight-rated Transocean LTD (NYSE: RIG), Diamond Offshore Drilling Inc (NYSE: DO) and Noble Corporation Ordinary Shares (UK) (NYSE: NE).

For investors hoping that a buyout will save the day, Anderson believes that an M&A cycle is still too far down the road to be a factor for the companies that are currently experiencing the most financial difficulties. While the violent temporary short squeezes in many of these stocks represent excellent short-term trading opportunities, long-term investors should consider staying on the sidelines for now.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for RIG

Apr 2021Morgan StanleyMaintainsEqual-Weight
Mar 2021BarclaysDowngradesEqual-WeightUnderweight
Sep 2020SusquehannaDowngradesPositiveNeutral

View More Analyst Ratings for RIG
View the Latest Analyst Ratings


Related Articles (DO + RIG)

View Comments and Join the Discussion!

Posted-In: Barclays David AndersinAnalyst Color Short Ideas Commodities Markets Analyst Ratings Trading Ideas

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at