2007

Nordea Initiates Disparate Coverage

Now with the very long days in Norway and the conclusion of festivities at Nor-Shipping ’07 andMarineMoneyWeek it appears that the analysts at Nordea are back at work initiating coverage on a number stocks with their usual in-depth analysis. The stocks covered are a mixed bag and include reefer, gas and offshore companies. Ingolf Gillesdal began by initiating coverage on Awilco Offshore ASA with a twelve-month target price of NOK 86 suggesting a potential return of 16% over the current price. The company is extremely well positioned with a fleet of 11 offshore drilling units which will not only generate significant revenues going forward but are significantly under-valued having been ordered ahead of the competition in 2005.

The first two jack-up rigs have been completed and are generating high earnings from good contracts. The remaining six rigs will deliver over the next two years. There is construction risk in Mr. Gillesdal’s view with respect to the three mid-water rigs acquired through its Offrig acquisition in 2006. Although two are contracted to Norsk Hydro and the third has an LOI from BP, the rigs are under construction at Yantai Raffles in China which has limited offshore experience. The risk however is mitigated by the company’s experienced management and the post-inspection contract awards by Norsk Hydro.

This is only an excerpt of Market Commentary – 06/28/2007

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