Cool Company (Buy, TP: NOK133.00) - Upside potential outweighs risk

Despite soft freight markets, we believe Cool Company offers attractive upside potential at the current valuation, trading at an average 2025–2026e EV/EBITDA of 7.0x (FLNG 9.5x). If we assume spot rates matching opex translates to 10.0x, spot rates equal to the YTD 3-year TC rates would calculate to 6.2x (or NOK195/share at an 8.0x EV/EBITDA). We reiterate our BUY, but have cut our target price to NOK133 (160).

Q3 in line, DPS cut by 63%

EBITDA of USD 58m (ABGSCe at USD 59m, cons at USD 57m). Cuts back on dividend, introduces buybacks. Share to trade down 5% or more vs. peers.

Market has turned south, but still too cheap

Edda Wind (Buy, TP: NOK30.00) - Well positioned

While EBITDA was broadly in line with expectations, the Q3 report gave early signs of improved operational reliability, which we believe will be key to narrowing the discount to underlying values (the stock is trading at 0.6x P/NAV). Recent contract awards (including a new 12+12-month contract announced with the results) have made the fleet fully booked until the 2025 summer season, and three of the four 2025 newbuild deliveries are now booked directly following yard delivery. We reiterate our BUY and NOK30 target price.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Petrobras FPSO delays may hit service volumes but lengthen cycle

Being the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to get investor attention. On the positive side, its latest 5-year plan sees 5% higher E&P spending than the previous one, and has a more stable phasing between the years, which is supportive for the cycle duration. However, several FPSOs are facing significant delays, which is on the downside for oil services, leading to delays for deepwater oilfield services (primarily drilling and subsea), likely resulting in lower ‘peak volumes’ and demand being spread over a longer period. The rig count is said to...