Subsea 7 (Sell, TP: NOK115.00) - Disappointing contract value
While it had been considered the frontrunner for Snorre 2040, we welcome Subsea7’s efforts to secure further backlog in Norway for 2019/20 execution. However, as Snorre 2040 is considered one of the major projects offshore Norway (24 wells), we believe the announced contract size of USD150m–300m is well below consensus expectations. Although we believe the contract value is at the mid- to high end of the range, it implies cUSD8m–12m per well in SURF, which we consider low compared to historical levels. While we see increased order inflow for the subsea industry, we believe there is a disconnect between consensus expectations on contract volumes and the reality and consider Snorre 2040 to be an example of this.Subsea 7 is a provider of seabed-to-surface engineering, construction and services contractor to the offshore energy industry. Co. provides products and services required for subsea field development, including project management, design and engineering, procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of these facilities to fixed or floating platforms or to the shore. Co. also provides products and capabilities to deliver full Life of Field services to its clients. Through its i-Tech Division, Co. provides remotely operated vehicles and tooling services to support exploration, production and drilling activities.
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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