Aban Offshore ‘Deep Venture’ litigation finally settled:: Emkay

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Aban Offshore

‘Deep Venture’ litigation finally settled

ACCUMULATE

CMP: Rs 542                                       Target Price: Rs 680

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n     Venture Drilling (Aban’s 50% JV through Sinvest) settles litigation issue on drillship Deep Venture – gets USD138 for early re-delivery of the rig to the owners

n     Aban to get ~USD 65 mn – 50% of cash inflows to VD. Aban management expect minimal losses on BV of USD65 mn

n     Based on annual cash flow of USD 34.4 mn, we estimate NPV of the entire charter period to be USD192 mn (CoE -15%). Compensation 28% lower than the NPV

n     We treat compensation to VD as one off -downgrade our FY12E earnings by 2.6%. Sharp correction makes valuation attractive (5.4X PER & 6.0X EV/E). Maintain ACCUMULATE