2007

Offshore Norway

In the recent issue of Nordic Credits, a publication of Nordea Markets, Mr. Morten Heiner Pederson describes some interesting developments in the offshore market, particularly in Norway.

At first, he notes what appears to be the development of a two-tier market. The share prices of the US offshore drillers, particularly those with Gulf of Mexico exposure have been hard hit, declining on average by more than 10%. The negative impetus comes from the dramatic decline in crude prices and a “loosening” supply/demand balance. In particular, the prospect of sub-$50 crude oil raises concerns about independent E&P companies’ willingness to increase capital budgets. Making matters worse is the fact that the driller’s are experiencing increasing cost inflation.

Although mainly investment grade, the spreads on the US drillers debt remains elevated largely affected by LBO rumors, although they too are influenced by shareholder-friendly initiatives such as buybacks which sometimes increase leverage.

This is only an excerpt of Deal Tables & Bond Prices – 01/04/2007

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.