Energy Morning - 22 August 2025

One of the cheapest names in our coverage

Mixed report

Energy Morning - 20 August 2025

Energy Morning - 19 August 2025

Energy Morning - 18 August 2025

Energy Morning - 5 August 2025

Full potential, half the price

Energy Morning - 17 June 2025

Q1 in line - Shell contract termination a drag on estimates

Muted 2025 growth expectations

Following Q1 earnings calls by some of the oil service companies, 2025 outlooks appear more challenging than previously. Baker Hughes expects international upstream spending to decline by mid- to high-single digits, while Halliburton sees its international revenues flat to slightly down. Furthermore, Weatherford expects 2025 international revenue to decline by low double- to mid-double digits. Precision Drilling flagged additional rig suspensions by Saudi Aramco, and SLB highlighted a slow start...

ENI capex cut but maintains shareholder returns

Driven by macro headwinds and uncertainty around trade tariffs, ENI was the first large oil company to introduce capex cuts for 2025, contributing to a more challenging business environment for oil services. Over the past five years, we estimate ENI to have been the oil major with strongest offshore spending growth, and it has been considered active and opportunistic while others have been more conservative. Hence, we see its reduction as a soft datapoint for oil services. ENI has optimised its ...

E&P spending sensitivity explored

With an oil price at the mid-USD60s/bbl level, focus on the oil major overspending situation, and resulting impact on the outlook for offshore-focused oil services, is set to increase further. While oil companies would likely cut, or even eliminate, buyback programmes first, we expect increased focus on spending reductions and efficiencies, creating a more challenging business environment for oil services. Hence, we see a risk of oil companies taking a more cautious approach, resulting in projec...

In a mid-cycle plateau

Following recent updates from E&P companies, we have reduced our 2025 offshore spending estimate to 0.5% (from c3% earlier this year). This is driven by a combination of actual 2024 spending being higher than expected (8% versus 4% previously), creating tougher comparables and a reduction in spending plans from Pemex in 2025. Despite growth flattening out, we still see the cycle building in duration, with execution of deepwater developments remaining on the agenda, albeit with a delayed executio...

Energy Morning - 17 March 2025

Energy Morning - 18 February 2025

Solid earnings visibility at 15-23% FCFE yield

Odfjell Technology (Buy, TP: NOK70.00) - Looking for H2 2025 growth

While the stock is attractively valued, we believe the company must create confidence in future growth and bring capex back to normalised levels for the investment case and upside potential to fully unfold. Management was optimistic that the activity uptick and cost cutting will progress in late 2025, helping H2 EBITDA. We see further growth for 2026e from its recently announced powered drill pipe contract. We estimate an equity cash flow yield potential of c12% in 2025, increasing to 17% in 202...

Odfjell Technology (Buy, TP: NOK70.00) - Earnings growth conviction ne...

Given some Well Services’ setbacks in 2024 (set to affect 2025), including less wired drillpipe work, we believe restoring investor confidence in earnings growth is key. We remain c10% below consensus on 2025–2026e group EBITDA, but find the valuation attractive at a 2026e EV/EBITDA of 2.2x. With recent refinancing allowing for dividend flexibility, we forecast flat dividends for 2025–2026, equal to a dividend yield of c13%. We reiterate our BUY and NOK70 target price.

Offshore spending plateauing

After reviewing major oil companies’ most recent spending plans, we estimate offshore spending growth of c3% YOY in 2025 (down from c5% late last year and c8% six months ago). We believe a combination of supply-chain bottlenecks, efficiency gains, and capital discipline among oil companies are the main reasons for spending growth fading, resulting in a mid-cycle plateau. On the flip side, the cycle keeps building duration, as we see investments being pushed into 2026–2027. Also, activity levels ...