Songa Offshore SE advanced the most in three months in Oslo after the Cyprus-based offshore drilling company said work on its delayed Trym rig is completed and costs won’t be more than it previously estimated.
The Limassol-based company climbed 24 percent, the biggest intraday gain since Nov. 16, to 7.065 kroner by 1:30 p.m. About 3.2 million shares have traded, more than the three-month average for daily volumes. The Trym rig received a compliance certificate and client testing is completed, Songa said today in a statement. The unit will earn a stand-by fee from Statoil ASA while the oil producer makes final modifications, it said.
Songa, with five rigs and four on order, has struggled with higher-than-anticipated spending as it expands to meet rising demand from oil and gas producers. It fell to a record low of 4.1 kroner on Nov. 15 on operational setbacks and amid investor concerns about the strength of the company’s balance sheet.
Completing work on Trym is “good news for the company,” Pareto Securities ASA said in a note to clients. The total cost of the so-called yard stay is expected to be about $205 million, in line with the company’s guidance on Jan. 15, the broker said.
Songa has declined 67 percent in the past year, giving it a market valuation of 1.4 billion kroner ($252 million). While its valuation is now “attractive,” the focus remains on “covenant issues and future refinancing needs,” Pareto said.
– Alastair Reed, Copyright 2013 Bloomberg.