UPDATE: Oppenheimer Initiates Coverage on Seadrill Partners, Attractive Distribution Growth Expected

In a report published Wednesday, Oppenheimer analyst Bernard Colson initiated coverage on Seadrill Partners LLC (NYSE: SDLP) with an Outperform rating and $35.00 price target.

In the report, Oppenheimer noted, “We initiate coverage of SDLP with an Outperform rating and $35 price target. The current fleet of offshore drilling rigs at SDLP's parent, Seadrill, is young and highly contracted for with major oil companies. We anticipate a long period of attractive distribution growth driven by dropdown acquisitions from parent SDRL. We also view the downside risk as limited given SDLP's traditional MLP structure (IDRs/subordination) and healthy distribution coverage. We believe that the anticipated distribution stream adjusted for risk is highly attractive with SDLP paying a current yield of 5.6%. The balance sheet is also well positioned currently, giving SDLP some flexibility with business execution.”

Seadrill Partners LLC closed on Tuesday at $30.27.