Norva24 (Buy, TP: SEK37.00) - German project headache

The Q3 results were mixed, with German governance issues clouding an otherwise solid performance. Now excluding the prohibited Norwegian Vitec acquisition combined with the German project business challenges, we have cut our 2024–2026e EPS by 3–10% and our target price to SEK37 (39). We reiterate our BUY, still seeing solid potential for a ‘buy-and-build’ sector roll-up case in the fragmented European UIM service market.

Valuation and market update

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

Odfjell Technology (Buy, TP: NOK70.00) - Growth slowing, but deep valu...

We see an increased risk of contracts in the well service segment being postponed or not renewed and have lowered our 2025–2026e EBITDA by 13–14%, leaving us c20% below consensus. The stock is trading at a 2025e FCFE yield of c17%, which we believe limits the downside risk, while we struggle to find any clear catalysts for the equity story ahead. We reiterate our BUY, but have lowered our target price to NOK70 (80).

Odfjell Drilling (Buy, TP: NOK100.00) - Set to deliver on dividend sto...

With its intensive 5-year survey schedule on track and within budget (two completed and two remaining), the company intends to increase its quarterly dividend with its Q4 results. The current dividend yield is 5%, while we estimate 7–16% for 2025–2026. We see further upside to this in a potential refinancing scenario that could allow all cash to be distributed to shareholders, suggesting potential for aggregated dividends equal to its entire market cap to be paid by end-2028. We expect Odfjell D...

Unmatched performance

EBITDA above and outlook remains strong

Valuation and market update

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

Energy Morning - 31 October 2024

Dividend increase approaching

Valuation and market update

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

Pemex effect looks to be limited for now

Following uncertainty yesterday related to Pemex’s 2024 budget cuts and potential reduction in rig count, we understand that the initial effect looks to be limited to a handful of rigs (potentially four) for a short period only. Affected rigs look to be locally owned units, which suggest that international contractors (Borr Drilling and Paratus Energy) are not affected. Hence, we now see a scenario with less-direct effect for international contractors than feared by the capital market yesterday....

Jackup uncertainty building

With reports of Pemex budget cuts and potential rig suspensions, additional uncertainty is added to the jackup market. The overhang from two rounds of Saudi Aramco suspensions (totalling 28 rigs, c6% of global supply) have been slow to absorb, and are likely to persist through 2025. With looming risk of even more Aramco suspensions, and rigs possibly being released in Mexico, we see a continued high competitive environment on new tenders. Dayrates for most premium jobs are cUSD120k–130k (a tad b...

Pemex saving plans add to jackup uncertainty

Several news reports suggest Pemex plans to cut USD1.4bn from its E&P budget this year. As the budget reduction is aimed at drilling, among others, we see a risk of jackup suspension. Pemex has 26 jackups chartered from contractors, with Borr Drilling and Paratus (through Fontis Energy) having most exposure with five rigs each, and such rigs representing 18% and 41% of 2025e EBITDA. The duration of suspensions appears unclear for now; while savings are limited to this year’s budget, reports sugg...

Valuation and market update

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

Petrobras rig pool tender saw limited competition and likely supportiv...

Today, the Petrobras ‘rig pool’ tender for up to four deepwater rigs with 3-year duration across three lots closed. Initially, it appears that seven contractors with nine rigs participated, split between four locals (Constellation, Etesco, Foresea and Ventura) and three international contractors (Seadrill, Valaris and Transocean). Hence, the participation would be less than at the recent Petrobras tender for Sepia/Atapu, which saw nine contractors taking part with 15 rigs. With different technic...

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...

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...

Odfjell Drilling Ltd: 1 director

A director at Odfjell Drilling Ltd sold 23,400,000 shares at 50.000NOK and the significance rating of the trade was 72/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two year...

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.