Citigroup opines that while US drilling ban has left 33 rigs idle in Gulf of Mexico, prompting wait-and-see attitude among drillers, demand for rigs unlikely to change over next 1-2 years unless the moratorium stays in place indefinitely. Hence, it expects the impact to be short-lived and will not alter rig supply-demand dynamics. Argues that concerns have masked increased need for more modern rigs with better safety features & more frequent repair and refurbishment activities
Adds S’pore rig builders are best positioned to capitalise in this area, which Chinese and Korean yards do not compete in. Keeps Keppel, SembMarine as Buy with respective targets of $11.10 and $4.60.
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