reports
- Martin Huseby Karlsen
Flattish guidance from Total
Total’s investor day presentation yesterday was on the soft side for offshore oil services, in our view, with increased focus (and capital) on ESG/low-carbon themes and flattish offshore E&P spending guided for 2021–2023 versus 2019–2020. As we believe consensus is for growth in offshore E&P spending, we find Total’s presentation on the downside versus consensus, but more aligned with our view of flattish spending ahead. Furthermore, as it said yesterday the company highlights continued ...
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Total accelerates dividend growth
Total is hosting its annual Investor Day today, and in connection with this the company has announced it will accelerate dividend growth to 5–6% per year (previously 3%) and remain disciplined on investments and costs. The updated outlook extends to 2025 and the theme is in line with comments from the other majors, with increased shareholder returns and capital discipline set to continue. The presentation is scheduled for 10:30 EST today and we expect more information regarding E&P spending in...
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Morten Jensen
- Martin Huseby Karlsen
No, not this year either
While we have trimmed our target price to NOK689 (713) to reflect the recent share price declines, we continue to find the value proposition in Aker attractive and maintain our BUY. Our base-case NAV is currently at NOK640/share, implying a 34% discount. Only including the value of its listed industrial holdings, the current share price currently implies a ~15% discount to these assets, which we find attractive.
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Increased transparency
As the largest deepwater-focused offshore driller, Transocean’s decision to disclose dayrates again sparked some investor optimism related to management’s confidence in dayrates moving higher. We believe the increased transparency could help investors to appreciate the ongoing positive momentum in dayrates (albeit from a very low level). Should more companies follow suit, we believe it could help to reset sell-side consensus to a lower, more realistic level for 2020–2021e in one go, which ...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Lukas Daul
- Martin Huseby Karlsen
Valuation and market update
Despite weak weekly share price performances, offshore drillers are up 3% on average over the past month. Asset valuation multiples are trading at all-time lows, while near-term earnings support for the sector is limited except for Odfjell Drilling, Maersk Drilling and Shelf Drilling.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Waiting for free cash flow
Jackup dayrates and utilisation are improving and the demand outlook is promising. However, this recovery is slower than those in the past and historical equity market cycles are not being repeated. We believe this has made investors impatient and caused the improving fundamentals to go unnoticed. Also, focus has shifted to near-term earnings support (rather than a willingness to underwrite asset values and the ‘option of a rig market recovery’). We believe these dynamics offer a compelling ...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Mid-year look at EP spending suggests offshore still flattish
Ahead of the ‘E&P Spending survey season’ over the next few months, we have taken an early look at spending trends from the major offshore names. Several of the key deepwater clients have provided longer-term updates, with focus on a continued disciplined approach to spending, while at the same time increasing shareholder returns. While there is some opportunistic spending, which we welcome, the oil companies do not want to overspend cash flow and we calculate that an oil price of USD65/bbl ...
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Valuation and market update
In this new, regular report, we take a look at valuation statistics, both asset-based and earnings-based, for the offshore drillers. In addition, we provide status on the backlog, financial leverage and estimate revision trends as well as an overview market statistics including where we see current rate levels in addition to rig count and utilisation.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
- Martin Huseby Karlsen
Rig for the future
At a recent industry conference, Equinor offered its preliminary thoughts around ‘Rig for the Future’ for the Norwegian Continental Shelf (NCS), and multiple updates now suggest that discussions with industry stakeholders on this concept are moving forward. Equinor wants the drilling and equipment industry to develop and build more efficient and environmentally friendly semis targeted for harsh environments. Although the (oversupplied) rig market may not require additional capacity, newbuild...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
- Martin Huseby Karlsen
No deepwater spending growth
Yesterday Shell hosted its annual Management Day during which it provided updated guidance, including capex outlook until 2025. For offshore, and deepwater in particular, Shell maintains a disciplined approach, with average deepwater spending for 2021–2025 (until the middle of next decade) down 20–25% versus 2018. Shell continues to focus on increased shareholder returns, as well as maintaining a healthy gearing and this, combined with higher capex for other segments leaves deepwater as a re...
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
- Martin Huseby Karlsen
Capitulation
Most offshore drillers have traded down 30%+ in the past month. As this has coincided with industry fundamentals finally coming off the bottom after a 5-year downturn, it has left many puzzled. We believe key to the weak share price performance has been a shift in investor focus away from: 1) trying to catch the dayrate momentum; 2) willingness to price in the option of a rig market recovery; and 3) (theoretical) NAV valuations; and towards 4) earnings-based valuations; 5) a realisation that con...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
An unfavourable environment weighs on DOLPHIN DRILLING ASA, which sees...
The independent financial analyst theScreener just requalified the general evaluation of DOLPHIN DRILLING ASA (NO), active in the Oil Equipment & Services industry. As regards its fundamental valuation, the title still shows 1 out of 4 stars and its market behaviour is seen as risky. theScreener believes that the unfavourable environment weighs on the sector and penalises the company, which sees a downgrade to its general evaluation to Negative. As of the analysis date May 7, 2019, the closing p...
- Martin Huseby Karlsen
Sete bids below minimum price
In the auction for the Sete Brasil newbuilds, local updates suggest Magni Partners is best positioned with a bid of USD250m for the four UDW rigs (two drillships at Jurong and two semis at Keppel), ahead of Keppel, which bid USD50m for the two rigs at its yard. Both bids are below the minimum price of USD554m and it is unclear what the next step from the creditors will be. As the saga surrounding these rigs has been lengthy, we would not be surprised if the creditors accept a bid below the minim...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
- Martin Huseby Karlsen
Another Brazil UDW contract closer to award
At the Petrobras tender for one UDW rig for 2-year duration at the BM-S-11 development, local updates suggest Brazilian contractor, The Constellation is frontrunner with the 6G drillship Laguna Star. Recent UDW datapoints have shown high volatility with most contracts of USD130k–170k, but there have been higher day-rates on jobs with forward start date, like the Maersk contract from yesterday at a USD265k level. With the high competition and near-term start-up on the BM-S-11 tender, we expect ...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
- Martin Huseby Karlsen
More contango test results ahead
In the ultra-deepwater (UDW) market, most interest relates to the outcome of tenders with forward start dates (2020/21) – whether or not bidding discipline among the contractors holds, and if oil companies award such jobs at a premium to the depressed spot market, or delay awards. Based on early-stage requirements, we expect more tenders with 2020+ start dates to be launched shortly. Of ongoing tenders, we expect the Woodside two-rig tender for Senegal with 2021/22 start to be the next award. ...
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
- Martin Huseby Karlsen
Going big
We expect few surprises in the Q4 reports for the large-cap offshore drillers, as our EBITDA forecasts are in line with – or slightly below – consensus. With respect to market commentary, we expect most contractors to highlight that a recovery in the UDW market is being pushed out in time, in line with our long-held view on this market. For jack-ups, we expect more optimism as both utilisation and rate increases have materialised.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
SHLF SHELF DRILLING
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
- Martin Huseby Karlsen
Cash flow helped by working capital
Last week, four oil majors reported Q4 results, with the remaining four to report this week and next. Similar to Q3, the reported Q4 cash flows were strong, helped by positive working capital and a high oil price (average USD67/bbl). For oil services, we consider it positive that E&Ps continue to generate excess cash flow, but highlight that their communications remain focused on capital discipline and shareholder distributions. Coupled with the oil price being down from the Q4 average, this lea...
1Q6 PROSAFE S.E.
AKAST AKASTOR ASA
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
DDASA DOLPHIN DRILLING ASA
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
OCY OCEAN YIELD ASA
ARCHERO ARCHER
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
SPU SPECTRUM ASA
E65F VALARIS PLC CLASS A
ODL ODFJELL DRILLING
DO DIAMOND OFFSHORE DRILLING INC.
NLC NOBLE CORPORATION PLC
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
RDC ROWAN COMPANIES PLC
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
ORIG OCEAN RIG
- Martin Huseby Karlsen
Soft in India, again
For the ongoing ONGC tender in India for nine jack-ups, the bid opening suggests that dayrates are once again on the soft side. On the last ONGC tender (in late 2017) both premium and standard jack-ups were awarded three-year jobs at USD25.3k/day and reports suggest the lowest bids for the ongoing tender are in a similar range (USD26k-27k). Although we model soft dayrates for (Shelf Drilling) jack-ups in India going forward, we consider it on the downside for the industry that there was no more ...
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