Energy Morning - 15 October 2024

Q3 was probably a strong FCF quarter

Petrobras set to reduce 2025 capex

Petrobras is expected to reduce 2025 capex from USD21bn to around USD17bn, according to a Reuters article today. Petrobras has a 5-year capex plan, but there are usually changes to its plans, and “current year” / “near-term” spending has a track-record of being revised lower (2024 capex was recently cut c24% to USD13.5bn–14.5bn), as Petrobras has struggled with value-chain delays. The updated spending represents YOY growth in 2025 of c21% (versus c50% earlier). The article mentions equipment pri...

Aker BP Minor model adjustments

Following Aker BP’s Q3 trading update, we have adjusted our estimates. We do not consider these changes to be material, and we have not changed our BUY recommendation. We reiterate our NOK280 target price.

Strong Q3 production

DOF Group (Buy, TP: NOK140.00) - Accretive fleet expansion

The proposed acquisition of Maersk Supply Service is set to position DOF as the market leader in CSVs and large AHTS vessels, giving increased scale in an increasingly sold-out subsea market at attractive terms (24% discount to GAV). We have included Maersk in our estimates, and consider the combined valuation attractive at a 2025e EV/EBITDA of 3.9x and annualised dividend yield of 14% from Q2 2025. We reinstate a recommendation with a BUY and NOK140 target price.

Valuation update

In this note, we show updated valuation statistics for the E&P sector.

Valuation and market update

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

Limited excitement for oil services from TotalEnergies’ Strategy & Out...

With total capex set to be flattish through this decade (organic capex lower in the out-years), TotalEnergies’ Strategy & Outlook presentation provided limited excitement for oil services. Strong capital discipline and allocation was maintained, with targeted oil production growth (3%) on flattish capex and shareholder returns being a top priority. With several large-scale developments for the next few years already defined (oil services mostly contracted), we consider its plan supportive for cy...

Aker BP (Buy, TP: NOK280.00) - Above consensus on Q3e production, belo...

Ahead of Aker BP’s Q3 trading update (due at 07:00 CET on 14 October), we forecast net production of 420kboed, 2% above Bloomberg consensus at 411kboed. However, our realised liquids price of USD77.8/bbl is below quoted Brent and consensus as the Johan Sverdrup price differential was slightly negative in Q3. We forecast EBITDA of USD2,585m for the quarter, 2% below consensus. Our 2024e production at 436kboed remains at the top end of the guided 420–440kboed. We reiterate our BUY and NOK280 targe...

Valuation update

In this note, we show updated valuation statistics for the E&P sector.

ODDO : A gradual weaning

‘Soft landing’... the term is in vogue and we think it aptly describes the current situation in the energy market. After a period of “excess profits”, the fundamentals are back in favour and prompt us to revise down our estimates for energy prices. - Alongside renewable energies, pockets of sustainable value creation are emerging for players capable of capitalising on the structural growth in volatility on the electricity markets but which are nonetheless trading at a discount In ...

ODDO : Un sevrage dans la douceur

“Soft landing”… le terme est à la mode et nous pensons qu’il caractérise bien la situation du marché de l’énergie aujourd’hui. Après une parenthèse de « surprofits », les fondamentaux reprennent leur droit et nous conduisent à réviser en baisse nos hypothèses de prix de l’énergie. A côté du renouvelable, des poches pérennes de création de valeur apparaissent pour les acteurs capables de profiter de la croissance structurelle de la volatilité des marchés électriques et qui souffre...

Crude Quarterly Q3'24: Lower oil price

Oil inventory draws for the rest of 2024. IEA is wrong – peak demand is not imminent. Both E&P and oil service shares look highly attractive.

Estimate changes from Crude Quarterly, 25 September

Valuation update

In this note, we show updated valuation statistics for the E&P sector.

Petrobras deepwater awards at decent dayrates

Following a lengthy tender process, Constellation announced it has been awarded contracts for two rigs for the Roncador development with Petrobras for 2.5 years starting in mid-2025. One of the awards is for a stranded newbuild (Tidal Action), while the second award is for an incumbent 2012-built 6G drillship (Laguna Star). With current uncertainty among investors related to deepwater, we consider the dayrate levels (around USD450k) solid, in particular for the incumbent 6G rig. For companies u...

Mixed risk for dividend cuts

Following the recent sharp oil price drop to ~USD70/bbl, we see increased investor concerns about the robustness of shareholder distributions. Historically, disappointments related to dividends and/or buybacks have triggered meaningful negative share-price reactions. For our large-cap NCS coverage, we believe oil prices would have to move below USD60/bbl for any negative surprises to unfold for Aker BP and Equinor, as both have strong balance sheets, enabling dividend flexibility. On the other h...

Valuation update

In this note, we show updated valuation statistics for the E&P sector.