Aban Offshore shares plunge; analysts wary

MUMBAI (Reuters) - Aban Offshore's shares lost almost a fifth of their value on Friday after its gas exploration rig sank in the Carribean as analysts said the accident will hurt the offshore services provider's revenue.

Aban Pearl, owned by Aban in alliance with Singapore-based Petromarine Energy Services Ltd, sank late on Thursday.

"This was one of the best assets for the company with a day rate of $385,000, which is the second highest revenue for the company in day rate terms. It was just been refurbished," Mehul Thanawala, Vice President (Research) at JM Financial told Reuters.

"Moreover, Aban Pearl had a long contract of 5 years, while other rigs of the company have shorter durations, typically of 2-3 years or even lesser," he added.

Aban shares fell as much as 20.2 percent in intraday trade before closing 18.3 percent lower at 831.25 rupees in a weak Mumbai market.

A top Aban official said the company would suffer revenue losses as it has lost an asset. However, the losses are yet to be gauged, even though the rig has been insured, he said, declining to be named.

Analysts are far more worried.

"We compute a negative cashflow impact of $65 million, or 20 percent annually" seriously denting the company's ability to repay debt, broking firm Ambit Capital said in a note, downgrading the stock to "sell" from "buy."

Aban has a debt obligation of $1.03 billion over FY11 and FY12, compared with cash flows of $500 million from operations and $240 million from insurance, Ambit added.

Edelweiss Securities has an "under review" status, while it added the accident and potential loss, if confirmed by the company, will be a "significant negative".

BNP Paribas kept its rating unchanged at a "buy," citing lack of confirmation from management. The firm said it would revisit estimates, post confirmation.

"Based on the cash flow impact, we see a 20 percent downside to the stock price," BNP Paribas said.

(Editing by Ramya Venugopal)

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