Approaching apex

Energy Morning - 30 April 2025

EBITDA 3% above - '25e guidance lifted

Aker Solutions (Hold, TP: NOK30.00) - Downside risk from 2026e

While being above consensus for Q1 and 2025, due to the estimated margin contribution from lucrative Aker BP projects, we believe consensus overestimates revenue capacity from 2026e as oil & gas projects taper off, being replaced by higher-risk renewables projects, in our view. We also see limited cash flow generation ahead due to working capital unwind. We reiterate our NOK30 target price, but have upgraded to HOLD (SELL).

Better risk-reward elsewhere - Down to HOLD

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...

Crude Quarterly Q1'25: weaker oil market fundamentals

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 February 2025

Stronger for longer

Aker Solutions (Sell, TP: NOK30.00) - Extending the happy days

While clearly positive that the AkerBP portfolio continues to surprise on the upside, further boosting 2025e, we see downside risk from 2026e on a limited lucrative oil & gas backlog. The renewables portfolio report another significant loss in Q4, making us lukewarm to its future margin potential. We reiterate SELL, but have raised our target price to NOK30 (27), reflecting the strong 2025e.

Energy Morning - 11 February 2025

Weaker Q4 more than offset by strong guidance

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 ...

Energy Morning - 10 February 2025

Energy Morning - 5 February 2025

Energy Morning - 29 January 2025

Slow start to 2025 for offshore, but cycle duration highlighted

SLB said on its recent Q4 earnings call that it expects flat global upstream spending YOY in 2025, while Halliburton guided for flat group revenue. Both expect offshore activity to improve as the year progresses, based on numerous FIDs late-2025 and into 2026 – but implying a slow start to the year. These comments mirror feedback we have had from industry sources, although we are already seeing offshore drilling campaigns slipping towards the end of 2026, or even into 2027. Hence, their comments...