Citi raised the firm’s price target on Seadrill (SDRL) to $50 from $48 and keeps a Buy rating on the shares. The firm believes deep water spending should be up modestly next year even with the floating rig count likely down low to mid-single digits. Either crude prices need to rise to $80 per barrel for the industry to absorb the higher subsea equipment costs and increase volumes, or costs need to deflate to allow volumes to rise, the analyst tells investors in a research note. Citi believes it is more likely that drilling volume upside is limited, especially if crude moderates, and updated its offshore driller models.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
