DENVER -
Pride International Inc.'s shares rose Friday after an analyst initiated coverage of the contract drilling services provider, citing strong global demand and ongoing potential for mergers and acquisitions.
Citi Investment Research analyst Robin Shoemaker put a "Hold" rating on Houston-based Pride International, which sells contract drilling and related services to oil and gas companies worldwide.
On Thursday, Pride International announced a two-year contract with OGX Petroleo e Gas Participacoes SA for a second-generation semi-submersible rig that will begin work next summer off the coast of Brazil. The deal is expected to generate $244 million in revenue, excluding amounts for mobilization, demobilization and client reimbursables.
In a research note, Shoemaker noted there has been an increase in offshore rig construction that will boost the worldwide jack-up fleet by 20 percent and the floater fleet by roughly 50 percent by the end of 2012.
"We share growing concerns that a jack-up oversupply could impact day rates by late 2009, but we expect deepwater market conditions to tighten further and deepwater day rates to rise," Shoemaker wrote in a research note published Friday.
The analyst also noted that the tightening of the global credit markets has not slowed the pace of mergers and acquisitions in the sector.
"The sharp drop in the public market values of the offshore drilling contractors since June could lead to more M&A deals soon," Shoemaker said.
Shares of Pride International rose $1.67, or 4.9 percent, to close at $35.53 Friday. In the past year, the stock price has ranged from $28.35 to $48.86.
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Source: http://www.forbes.com/feeds/ap/2008/09/12/ap5419355.html
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Sunday, September 14, 2008
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