Contract coverage turns MTM positive

Flex LNG (Buy, TP: NOK335.00) - 13% yield highly appealing

Flex LNG remains insulated in a challenging freight market, with only one vessel open into a potentially poor 2025, while the two positions for 2026 are still likely to see options extended into 2028. Lower rates have led to our minor near-term adjustments, but we see no reason to doubt its USD0.75 quarterly DPS, offering an attractive 13% dividend yield into better markets. We reiterate our BUY, but have cut our target price to NOK335 (345).

Q3 as guided, Q4 guided as expected

EBITDA of USD 70m (ABGSC and cons at 70m). Q4'24 guidance in line with expectations. Share to trade flat to slightly down vs peers.

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...