DO’s Earnings And Cash Flows Are At Risk

Analysts at Pritchard Equity Research reiterate their "neutral" rating on Diamond Offshore Drilling DO. The target price for DO has been reduced to $60. According to Pritchard Equity Research, “DO disclosed force majeure notices on two incremental floaters, bringing its total to three, as well as two jackups. If the revised deepwater moratorium does not permit for development and appraisal work, along with completions, making it more difficult for operators to declare force majeure, DO's earnings and cash flow are at risk.” “The rigs subject to force majeure include: 1. Ocean Endeavor, a 10,000’ moored 5th gen. semi contracted with Devon Energy Corp DVN thru June 2011 at ~$295,000/day. 2. Ocean Confidence, a 10,000’ DP 5th gen. semi contracted with Murphy Oil Corp MUR thru March 2011 at ~$500,000/day. 3. As previously disclosed, the Ocean Monarch, a 10,000’ moored 5th gen. semi contracted with Anadarko Petroleum Corp APC and sublet by Cobalt International Energy Inc CIE at ~$445,000/day. 4. Ocean Columbia, a 250’ IC contracted with Chevron Corp CVX to July 2010 at ~$45,000/day. 5. Ocean Scepter, contracted with Arena Resources Inc ARD to August 2010 at ~$80,000/day,” the analysts mention. More Analyst Ratings here