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Re: eastunder post# 459

Thursday, 09/01/2016 6:46:26 PM

Thursday, September 01, 2016 6:46:26 PM

Post# of 975
ORIG Article time to read again.

ORIG Article http://seekingalpha.com/article/3999702-ocean-rig-great-buy-patient-investors

Summary

Ocean Rig (Orig) has been able to use depressed debt and asset values to increase shareholder value in a big way and has shown outstanding earnings so far.

The shares' huge valuation discount compared to competitors should result in significantly better performance in coming years.

Based on cash and current contracts, the company will not have financial problems in the next years and will be able to maintain a healthy cash balance.

Management displays a much more bearish medium term view on the market than competitors and says that it's evaluating long term restructuring options.

The main intention of that talk seems to be to frighten debt-note holders to sell the notes back to the company at significant discounts.

Model assumptions and Results

Below, I present an updated financial table for 2016 and 2017 for Ocean Rig (NASDAQ:ORIG), based on the current situation, updated cost and contract data and the announced ship delivery delays including payment rescheduling.

Among the assumptions:

- No further contracts in 2016 and 2017 (which is obviously the worst case)

- No more cold stacking

- Only cash revenues and costs are recorded - no deferred items

- An arbitration settlement of $75 M in 2017 (50% of the claims) regarding Eric Raude and Olympia

- Further buybacks of 2017 debt, leading to a repurchase gain of $100 M

- Ship opex costs (operating ships): 135k/d in Q1 of 2016, 115k/d thereafter (excluding maintenance)

- Investments in upgrades and spares of $ 105 M in 2016 and $ 50 M in 20