Earnings unchanged but target price reduced $5.05 to $4.90, still based on 15x CY09 EPS. Our earnings estimates remain intact but have excluded the potential upside from drilling division. The drilling unit should give upside to our FY10 earnings forecasts and beyond, if executed. Our target price is however, reduced on lower US$/S$ exchange rate.

Swiber is trading at undemanding valuation of 8x CY09 core EPS against a 3-year CAGR of 59% through to CY10. We see the recent pull back in share price as good opportunity for accumulation. Contract wins and successful project executions as key catalysts for the stock. Maintain Outperform.Offshore construction enquiries remain high in the region due to tightness of construction vessels. Swiber’s order book as at end- 1Q08 was at US$476m with YTD order win of US$248m (excluding LOI fro CUEL worth US$50m for 5 years or possibly US$250m in total). We believe 2008 order book could exceed US$1bn if Swiber clinches a 3-year contract for ED.

This enables Swiber to offer very competitive day rates for chartering the rig, said Mr Goh. Mr Olivera, however, stresses the rates offered will be competitive and that they won't be undercutting the market. Another benefit to clients is the rig uses an anchor-mooring system to hold it in place as opposed to the popular dynamic positioning (DP) system currently in use. DP systems make use of motorised thrusters to hold the rig in position and this can add up to US$50,000 a day in running costs to the operator in today's high oil price environment. 'Visibility is strong till 2012, and beyond that we remain very bullish on the deepwater drilling sector due to the combination of positive market forces in the rig supply market, continuing high oil prices and the decline of oil reserves,' said Mr Olivera.