Market Overview

Could Ocean Rig Be The First Of The Deepwater Dominoes To Fall?

Share:
Could Ocean Rig Be The First Of The Deepwater Dominoes To Fall?

Ocean Rig UDW Inc. (NASDAQ: ORIG) shares plunged more than 61 percent in Friday’s session after the company reported it's continuing to explore the possibility of bankruptcy. Deepwater drilling investors were hoping that crude oil’s surge from February’s low of near $26/bbl to above $51/bbl in June would be enough to keep deepwater stocks afloat. However, a pullback in recent weeks to the low $40s may have extinguished the last bit of hope that Ocean Rig can avoid a bankruptcy.

The Ocean Rig news seems to have served as a reality check for other deepwater stocks as well. Transocean LTD (NYSE: RIG) shares fell 4.5 percent on Friday, and ENSCO PLC (NYSE: ESV) shares dropped 3.8 percent to close the week.

The market appears to be re-thinking its knee-jerk selloff on Monday, however, as both Transocean and ENSCO have recovered much of their Friday losses.

Earlier this month, Susquehanna upgraded Transocean from Negative to Neutral.

Related Link: JPMorgan Sees Opportunity In Oil Services, Says M&A Will 'Take Backseat'

JPMorgan analyst Sean Meakim doesn’t share the bullish sentiment. In May, Meakim specifically urged investors to avoid offshore oil plays ENSCO, Transocean and Noble Corporation Ordinary Shares (UK) (NYSE: NE).

“Highly-levered offshore drillers in particular have mostly exhausted cost reductions and are now tapping the capital markets to avoid longer term cash flow hurdles,” he wrote.

Still, at their current depressed share prices, if these offshore drillers can continue to avoid bankruptcy until the oil market significantly improves, the stocks could make for a compelling high-risk speculation play.

Latest Ratings for ORIG

DateFirmActionFromTo
Mar 2018Initiates Coverage OnHold
Dec 2017Initiates Coverage OnOutperform
Aug 2016TerminatesUnderweight

View More Analyst Ratings for ORIG
View the Latest Analyst Ratings

Posted-In: JPMorgan Sean MeakimAnalyst Color Commodities Opinion Markets Analyst Ratings Movers Best of Benzinga

 

Related Articles (ESV + NE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
HSKACanaccord GenuityMaintains75.0
AVGOMorgan StanleyMaintains265.0
AMATNeedhamMaintains56.0
VOYACitigroupMaintains62.0
VCCitigroupMaintains86.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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 vipaccounts@benzinga.com

Deutsche Initiates Coverage On Nexeo With A Buy Rating

Expect Robust Q3 Results From Applied Materials, Says D.A. Davidson