April 17 (Reuters) - Citigroup started coverage of Superior Energy Services Inc (SPN.N) with a “buy” rating, and said the oilfield services provider was well-positioned to enter the fast growing deepwater market, sending its shares up 10 percent.
Increasingly, more and more oilfield services companies are trying to step up their exposure to deepwater drilling, which has remained fairly insulated from the global economic downturn and promises smoother income flows.
New Orleans-based Superior’s strong track record in the shallow water well intervention market supports its strategic move into deeper water, analyst Robin Shoemaker said in a note to clients.
“Through acquisitions and organic growth, Superior has assembled a suite of specialized oilfield services that are complementary and that can be bundled to lower costs and minimize production downtime,” Shoemaker said.
Customers have responded positively to the company’s product and service offerings under its “rig-less” well intervention model, said Shoemaker, who set a price target of $20 on the stock.
Shoemaker expects Superior’s 2009 profit to drop about 50 percent to $2.00 a share as U.S. onshore and offshore oilfield services markets go through a cyclical decline, but sees a rebound along with other stocks in the next cycle.
Shares of Superior Energy touched a high of $17.41 Friday morning on the New York Stock Exchange. (Reporting by Shradhha Sharma in Bangalore; Editing by Anne Pallivathuckal)