Ahead of the white paper on Friday, the government provided more details on offshore wind development in Norway. The bottom-fixed areas will be developed without state-aid, and awards will follow an auction in early 2022. Floating areas will be awarded on qualitative criteria and receive government support (level not yet decided). Both areas will be split into 2–3 licences, which will allow multiple consortiums to be awarded. While we believe the planned sizes (in GW) allow for critical mass, th...
The initial licensing rounds for offshore wind acreage in Norway are lining up to be competitive, with several high-profile local companies/consortiums already having announced their intention to participate. In addition, we would expect traditional renewables producers and international E&P companies to take part. Currently there is limited clarity on how the licensing process will work, but more details are expected in a government white paper (‘Stortingsmelding’) on 11 June. Although the winn...
Our initial impression from the detailed 5-year plan from Petrobras is that there is no aid for the oil services sector in the coming years. Overall spending is seen down 28%. Capital discipline appears high, with focus on pre-salt production (Buzios), resulting in among others exploration spending down c50%, likely to hurt both seismic and drilling. Compared to what was already known, no new FPSOs were introduced, which we consider negative for subsea and drilling demand.
Over the past few days, US large-caps Schlumberger and Halliburton have reported Q3 numbers, with both reporting decent margins. However, it is clear that a recovery is still quite far out in time, especially with the global resurgence of Covid-19. We consider their offshore-related market commentary to be fairly realistic, seeing subdued international activity over the next 12 months. That said, we remain concerned about the offshore fundamentals even beyond this, with key clients continuing to...
Overweight Subsea 7 relative to TGS is in our view clearly supported by both structural E&P spending trends and valuation. Subsea 7 is leveraged towards the development cycle and has also built up a renewable business that the capital markets are likely to embrace and value at a higher multiple than its oil & gas business. It is also trading at an average c12% FCF yield for the next two years and consensus now appears sober. TGS is a pure-play on the exploration cycle, which is set to face furth...
Petrobras provided an updated E&P spending outlook following Covid-19; for 2021–2025e, it sees total E&P spending at USD40bn–50bn, down 30% from the previous 5-year plan (2020–2024). While providing no guidance by year, the plan suggests annual spending in the range of USD8bn–10bn on average, implying limited upside potential to forward spending versus recent years. While exploration guidance also has been lowered versus last year, Petrobras still plans to spend a decent amount on exploration in...
KVAERNER (NO), a company active in the Heavy Construction industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 4 out of 4 stars, as well as its unchanged, defensive market behaviour. The title leverages a more favourable environment and raises its general evaluation to Positive. As of the analysis date August 11, 2020, the closing price was NOK 9.94 and its potential was estimated at N...
Huge Petrobras development, but limited services need Petrobras has again highlighted the bright future of the Buzios field, part of the ‘transfer of rights area’, looking to add eight new FPSOs. From an oil service perspective, we welcome new developments but at the same time, we consider the oil service intensity for this development to be low. Wells are highly productive (40k–50k barrels/d per well), resulting in a need for few wells, which is the main demand driver for rig and subsea ...
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