FITCH: TO BUY PEERS
A cyclical downturn in offshore drilling might provide an opportunity for driller contractors having financial flexibility to buy their peers at favorable prices, Fitch Ratings of Chicago said in a recent research note, adding that master limited partnerships (MLPs) in particular can provide financial flexibility.
"Near-term offshore demand has moderated," Fitch said in a recent report, estimating newbuild rigs scheduled for delivery through Dec. 31, 2018, will equal about one third of the working worldwide rig fleet.
"This has led to contracting delays, and it will also probably result in shorter-contract terms and lower dayrates over the near-term," the credit ratings agency said.
Meanwhile, drillers might consider buying assets rather than investing in new rigs as they seek to improve asset quality and gain market share. More consolidation among offshore drilling contractors also could improve pricing power and, if necessary, a more orderly fleet attrition process, Fitch said.
A corporate parent using an affiliated MLP can fund an acquisition through dropdown proceeds. MLPs also can enable contractors to purchase peers directly at tax-advantaged multiples, Fitch said.
"Both options provide further acquisition advantages to corporate drillers with an affiliated MLP. In either case, parent-driller stakeholders would directly (via a corporate acquisition) or indirectly (via an MLP acquisition) improve asset quality and cash flow prospects," Fitch said.
Affiliated MLP stakeholders would realize additional asset and cash flow growth.
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WNA - Apart from adding capacity, utilisation of existing plants has improved markedly since 2000. In the 1990s capacity factors averaged around 60%, but they have steadily improved since and in 2010, 2011 and 2014 were above 81%. Balakovo was the best plant in 2011 with 92.5%, and again in 2014 with 85.1%.
WNA - India has a flourishing and largely indigenous nuclear power programme and expects to have 14.6 GWe nuclear capacity on line by 2024 and 63 GWe by 2032. It aims to supply 25% of electricity from nuclear power by 2050.
WNA - Mainland China has 38 nuclear power reactors in operation, about 20 under construction, and more about to start construction. The reactors under construction include some of the world's most advanced, to give a 70% increase of nuclear capacity to 58 GWe by 2020-21. Plans are for up to 150 GWe by 2030, and much more by 2050.
PLATTS - "The domestic uranium mining industry needs US government assistance to survive the foreign onslaught -- particularly from Russia and Kazakhstan -- that has undermined the US uranium industry while new players -- particularly China -- will soon make the situation worse," Energy Fuels and Ur-Energy said in a petition they jointly filed with the department.