The New Reality
We expect offshore E&P spending to decline 15% in 2017. As oil companies have made progress in resolving cash overspending, we see the potential for flattish offshore spending in 2018 if oil prices stabilise in the mid-50s USD/bbl, but further downside at USD50. At the same time, we see offshore – in particular deepwater – continuing to lose capital allocation to US onshore, and oil companies remaining focused on dividends and deleveraging. YTD, oil service stocks are down 31% on average, and while we maintain a more muted view than consensus on most names, we favour shallow-water and North Sea exposure over deepwater.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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