Crude Quarterly Q2'25: In the absence of war, the oil market is well s...

Energy Morning - 17 June 2025

Market tailwinds, valuation headwinds

Energy Morning - 6 June 2025

Rates above USD 60k/day, but 0.7x P/NAV

Q1 above, Q2 below, net neutral

Better across the board

Q1 slightly better than expected

US terminal expansions are on track

Continues its international expansion

Needs to lock in 2026

Offshore Drilling (DNB Markets) (, ) - (39 pages)

Kongsberg Gruppen (Sell, TP: NOK1250.00) - Expectations are set too hi...

We have downgraded Kongsberg Gruppen to SELL (HOLD) and lowered our target price to NOK1,250 (1,450). We believe the 2025e P/E of 46x overstates its growth capabilities 1) on an absolute basis, in a scenario where all of NATO reaches defence spending of 3.3% of GDP; and 2) compared to other defence companies as, in our view, the market appears to miss that only 20% of its 2024 sales were from European defence spending.

Meets expectations in Q3

Q1: Small Adj. EBITDA beat and stronger orders

Another round of Aramco suspensions expected

Market sources suggest Saudi Aramco will further reduce its rig count in the coming months through early contract terminations and potentially more suspensions, which would mark the ‘fourth round’ of rig reductions. This follows last month’s request for dayrate discussions (historically, such requests have preceded it suspending rigs). We believe this round could be extensive, affecting c10 jackups out of its current rig count of c57 rigs. At the peak, Aramco had 92 jackups (22% of global demand...

Increased political risk

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...

Demand recovery continues to be delayed

Should continue to be the relative winner

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 ...