It seems to me that Mr. Ole Slorer has a good justification for changing his Base Case rating for NADL from E (equal-weight) to NR (not-rated) . IMO the assumptions that one must make when evaluating NADL go far beyond other offshore drilling companies ... for several reasons. (1) Size risk: The number of rigs in the NADL fleet is relatively small, thus only a few rigs can seriously impact the performance of the entire company. (2) Location risk: NADL is focused on a geographic territory. (3) Large Customer Risk: Rosneft framework agreement makes them a large portion of revenue. These are all disclosed in the SEC filings ... it's just that all can easily foresee how any of these risks might be greater now than they were 1-2 years ago. If I was Ole Slorer, would I feel comfortable taking a stand on how to assume these will pan out??? I think not, so I can see switching to a NR, not-rated ... IMO these risks, in addition to all the other risks that need to be considered in arriving at a 1 year Price Target ... are tough to measure in constructing a Base Case rating.
That being said, he does have a significant 1-year Price Target for NADL if one wants to assume a certain amount of crude oil price/barrel, day-rate, and Rosneft progress.
The point I'm trying to show is it all depends on what assumptions one believes. Which is Investing 101. T.D.