Thiago Murdehachvili, chief investment officer at London’s Granular Capital says Borr Drilling Ltd. (NYSE: BORR), is well positioned to achieve exceptional returns by 2025.
The offshore drilling vessel company is a good investment, as 30% of global jackups are nearing retirement.
Borr currently has 24 jack-up modern rigs.
Borr Stock has disappointed its investors this year, but hedge funds continue to believe that it could quadruple by 2025.
Granular Capital is bullish on Borr Stock.
Borr’s business is dominated by oil and gas companies that hire its vessels for drilling operations on shallow water.
Granular Capital believes that the share price of the company will rise, also due to the fact that ESG has been a factor in the construction of new Jack-Up Rigs for the last decade.
The supply has almost all been consumed. In the last decade, there haven’t been any new orders. “The banks have withdrawn from the drilling industry due to ESG issues,” Mordehachvili stated last week at Sohn Conference.
He added that the economic climate discourages the building of new jack up rigs, which makes the fleet valuable.
Borr shares can be a good investment for cash flow
Thiago Mdehachvili is a fan of Borr, as its shares are expected to rise in value even though the price for renting Borr’s offshore drilling vessels will increase significantly.
This oil and gas company could see a boost in cash flow from higher rental costs.
Saudi Aramco has suspended Borr Drilling’s contract for a minimum of one year.
Mordehachvili is still optimistic, as his company can see a reasonable revenue increase over the next couple of years, after signing contract extensions with Valeura Energy, Fieldwood Energy and Exxon Mobil.
Borr is set to be delisted from Oslo Stock Exchange at the end of the year 2024.
Borr is not threatened by the green energy transition
Borr Drilling Ltd. was more reserved when it discussed its future outlook on the 7 th earnings call.
Granular Capital is still positive, as the company does not see the transition to cleaner sources of energy as a risk for Borr’s shares on the short or medium-term.
The shallow waters are a good choice because they have a lot of hydrocarbons that are cleaner than anywhere else, as well as being cheaper to mine. These will be the final oil wells to be drilled. Thiago Murdehachvili says, “We’re at the bottom of cost curve”.
Borr isn’t the only stock that has been bullishly viewed by hedge funds.
Arctic Securities’ Sebastian Grindheim sees a potential upside of about 100% from the current level.
The post Oil and Gas Stocks Could Quadruple Your Money in 2025 could be updated as new information becomes available
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