Aban Offshore Limited

Drilling, Energy

[email protected]

According to Rigzone.com, Aban Offshore Limited is currently operating four drillships in in Iranian waters.


"Aban Offshore Ltd. (ABAN), Asia’s third-most-indebted oil rig provider, will be able to obtain cheaper U.S. and European financing following the easing of some sanctions on Iran, the Indian company’s biggest market. The company will be able to cut its cost of debt by as much as 2.5 percentage points as the easing of sanctions allows Aban to borrow from European and U.S. banks, a route previously closed, according three analysts surveyed by Bloomberg News. The driller had debt equivalent to 129.9 billion rupees ($2.1 billion) as of Sept. 30, according to data compiled by Bloomberg, eight times as much its market value…'Aban now has the door open to access liberal interest rates and take cheaper debt for refinancing,' Kenin Jain, head of equity sales at Emkay Global Financial Services Ltd., said by phone from Mumbai on Nov. 27. 'This is a huge respite. It will boost earnings and improve cash flows. The stock is already reacting to this.' Emkay has an 'accumulate' rating on the stock…Aban, based in the south Indian city of Chennai, has $398 million of debt due for repayment through 2015, according to data compiled by Bloomberg. Its weighted average cost of debt is 7.1 percent and that for debt and equity is 7.9 percent, according to data compiled by Bloomberg.

Its short-term debt is rated A4, the second-lowest grade, by Mumbai-based Credit Analysis & Research Ltd. Standard & Poor’s and Moody’s Investors Service doesn’t rate the company. Aban has surged 26 percent this week, making it the second-best performer in the S&P BSE 500 Index. The shares rose as much as 4.1 percent to 385.45 rupees and traded at 379 rupees as of 11:32 a.m. in Mumbai. This year, Aban has gained 0.2 percent, compared with a 7 percent gain in the S&P BSE Sensex. Eight of Aban’s 18 rigs and drillships are operating in the Gulf, including four in Iranian waters, according to Rigzone.com, which collects data on rig locations. Five rigs are in South Asia, two each in Mexico and Southeast Asia and one in Brazil, according to the company’s website. Aban probably would have struggled to renew contracts for some of the rigs operating off of Iran next year without the easing of sanctions, Jain said. The renewals will help the driller maintain cash flows and revenue, he said. At least three rigs are in the Middle East region, Aban says on its website, without specifying where. It also doesn’t give locations for eight of the rigs. C.P. Gopalkrishnan, deputy managing director of Aban, declined to comment on the company’s debt, rigs and the impact of the U.S.-Iran deal at his office on Nov. 26. 'The risk factor for Iran has reduced significantly with the Iran-U.S. deal as revenue over the next couple of years is now ensured,' said Mayur Matani, a Mumbai-based analyst with ICICIdirect.com, who has a 'hold' rating on the stock. 'The company’s valuation would rise and there are possibly more gains for the stock in the near term.'" (Bloomberg, "Iran Nuclear Deal Offers Aban Help to Cut Costs: Corporate India," 11/29/13)