Looking at required day-rates

Although there are several ongoing deepwater tenders, the lack of recent deepwater fixtures has created uncertainty among investors related to day-rates. Consequently, we have analysed the required day-rates to support current share prices and valuations. Given the high operating leverage and multiple variables involved (utilisation, lifetime and cost of capital), we estimate the sector requires 7G drillship day-rates from the mid-USD300k and above to support the current share prices.

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...

Crude Quarterly Q1'25: weaker oil market fundamentals

Energy Morning - 25 March 2025

Pemex seeks national partnerships to accelerate developments

In line with its earlier communication about Pemex looking for partners to re-start drilling activities and fight oil production decline, local news reports suggest that Pemex is seeking partnerships for 17 blocks (11 offshore and six onshore) to secure external capital. It is mostly considering local partners and intends to take the role as operator in most of the blocks. At first glance, the expected volume from the partnerships looks to be small, with only 66kbd to be added by year-end 2025. ...

Valuation and market update

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

Deepwater fixture activity set to increase

After a slow start to the year for deepwater awards, we see long- and short-term jobs nearing rig selection. On the positive side, we believe the capital markets will appreciate increasing fixture activity and oil companies committing to long-term development jobs, supporting cycle duration. From a dayrate perspective, we see the bifurcation thesis unfolding, as some contractors are more focused on prioritising utilisation, also with counterparty, rig quality and region playing a role. Hence, as...

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...

Valuation and market update

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

Valuation and market update

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

Valuation and market update

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

Petrobras claim to drilling contractors related to Sete project

Seadrill said on its earnings call that it recently had received a claim of USD213m from Petrobras related to its involvement in the Sete project in Brazil. Sete was launched in 2011, looking to build 29 deepwater rigs in Brazil, with involvement from several drilling contractors; Seadrill, Odfjell Drilling, Queiroz Galvao (now Constellation), Odebrecht (now Foresea), Petroserv (now Ventura Offshore) and Etesco. Seadrill said local and international peers have received similar claims. It further...

Update on Aramco and Pemex

In the jackup market, suspensions by Saudi Aramco and Pemex over the past 12 months have created continued uncertainty among investors. We see the overhang of 11 ex-Aramco premium jackups yet to be re-contracted extending through 2025. Looking ahead, we believe the worst is behind us, but we still see a risk of further reductions in Saudi Aramco’s rig count, possibly through additional suspensions of 2–5 rigs, while other rigs are set to be extended. In Mexico, uncertainty remains high, and it i...

Brazilian regulators said to have suspended several drillships

News reports, as confirmed by Ventura Offshore, suggest the Brazilian regulator (ANP) has ordered the suspension of operations for certain rigs offshore Brazil, related to what appears to be safety issues. Unlike suspensions seen for jackups by Saudi Aramco and Pemex, these suspensions are not related to a lack of demand, but rather what appears to be safety procedures in the view of the regulator, which the news article highlights as “minor issues”. Hence, we expect no wider impact for the offs...

Valuation and market update

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

The dividend story has started

Valuation and market update

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

Odfjell Drilling (Buy, TP: NOK100.00) - Standing out

The quarterly dividend was more than doubled to USD0.125 (c9% yield), well above our (conservative) expectation, and we see more to come, with an 18% yield in 2026–2027e – and potentially more in a refinancing scenario that could allow for 83% of its market cap to be distributed by end-2028e, and ~100% by end-2029e. With softness in the deepwater and jackup markets, its unique position in Norway becomes even more visible, supporting a continued outperformance of the sector. We reiterate our BUY ...

Energy Morning - 11 February 2025

Too early to buy the market recovery