Dahlman Rose Chimes In On Offshore Drillers

Dahlman Rose said uncertainy remains following the government's moratorium on offshore drilling. The U.S. government has extended the moratorium on drilling permits in water depths in excess of 1,000ft for 6 months and Dahlman Rose said that 34 Gulf rigs may see downtime in the near future. Dahlman Rose said Transocean RIG, the world's largest offshore drilling services provider, has the largest exposure to the Gulf region, deriving 29% of its EBITDA from Gulf rigs. Dahlman Rose has a "hold" rating on Transocean. Noble NE derives 28% of its EBITDA from Gulf rigs. Dahlman Rose rates the shares a "buy" with a $52 price target. Ensco ESV is next in terms of exposure with 27% of its EBITDA coming from the Gulf. Dahlman Rose rates Ensco a "buy" with a $58 price target. Diamond Offshore DO gets 22% of its EBITDA from the Gulf and Dahlman Rose rates that stock "hold." Pride PDE and Seadrill SDRL carry 11% and 5% exposure respectively, according to Dahlman Rose, which rates both stocks "hold." The extension of the moratorium should have a more limited impact on jackup drillers such as Rowan RDC and Hercules HERO, but they are expected to face some downtime for inspections, Dahlman Rose said. The firm rates Rowan a "buy" with a $35 price target.