Energy Morning - 25 November 2024

Brent spot: USD 74.6bbl, flat from last OSE close.OSX: 81.5, down 0.3% since last OSE close.Paratus (B): guides up but also focus on rig in standby and Pemex uncertainty.AKSO (B): goes ex. NOK 21 / per share e.o dividend today.

Valuation and market update

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

Petrobras FPSO delays may hit service volumes but lengthen cycle

Being the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to get investor attention. On the positive side, its latest 5-year plan sees 5% higher E&P spending than the previous one, and has a more stable phasing between the years, which is supportive for the cycle duration. However, several FPSOs are facing significant delays, which is on the downside for oil services, leading to delays for deepwater oilfield services (primarily drilling and subsea), likely resu...

Energy Morning - 18 November 2024

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.

Aker Solutions (Sell, TP: NOK48.00) - Excitement overdone

We can understand the initial investor excitement about a dividend, but compared to fundamentals, we find yesterday’s share price reaction exaggerated, in particular as the stock was strong into what was a weak Q3 report. Looking ahead, we see no free cash flow generation over 2025–2027e. We reiterate our NOK48 target price but have downgraded to SELL (HOLD).

Energy Morning - 1 November 2024

Solid operations, proper capital allocation

Energy Morning - 31 October 2024

Aker Solutions (Hold, TP: NOK48.00) - Small SOTP discount removed

Having repeatedly said a capital allocation strategy update would be provided with the Q4 results, it surprised the market by announcing a dividend of NOK21/share (46% of market cap) prior to the Q3 results, effectively meaning all liquid investments are to be distributed. We expect focus to be on the value of ‘the stub’, its 20% OneSubsea stake and proper working capital adjustments. As our SOTP had a 5% discount on the items now being distributed, we have increased our target price to NOK48 (4...

Aker Solutions (Hold, TP: NOK46.00) - Low visibility beyond 2025

Despite our expectation of continued strong execution near-term (reflected in our increased 2025e EBITDA), we believe the combination of weak prospects for new large orders and the upcoming working capital unwind will weigh on the stock in the quarters ahead. We find it fairly valued on our SOTP and believe investor focus will gradually shift towards the lack of backlog upon completion of the Aker BP portfolio projects. We reiterate our HOLD and NOK46 target price.

Valuation and market update

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

Energy Morning - 25 October 2024

Floating on a strong backlog in Q3e

Pemex effect looks to be limited for now

Following uncertainty yesterday related to Pemex’s 2024 budget cuts and potential reduction in rig count, we understand that the initial effect looks to be limited to a handful of rigs (potentially four) for a short period only. Affected rigs look to be locally owned units, which suggest that international contractors (Borr Drilling and Paratus Energy) are not affected. Hence, we now see a scenario with less-direct effect for international contractors than feared by the capital market yesterday....

Jackup uncertainty building

With reports of Pemex budget cuts and potential rig suspensions, additional uncertainty is added to the jackup market. The overhang from two rounds of Saudi Aramco suspensions (totalling 28 rigs, c6% of global supply) have been slow to absorb, and are likely to persist through 2025. With looming risk of even more Aramco suspensions, and rigs possibly being released in Mexico, we see a continued high competitive environment on new tenders. Dayrates for most premium jobs are cUSD120k–130k (a tad b...

Pemex saving plans add to jackup uncertainty

Several news reports suggest Pemex plans to cut USD1.4bn from its E&P budget this year. As the budget reduction is aimed at drilling, among others, we see a risk of jackup suspension. Pemex has 26 jackups chartered from contractors, with Borr Drilling and Paratus (through Fontis Energy) having most exposure with five rigs each, and such rigs representing 18% and 41% of 2025e EBITDA. The duration of suspensions appears unclear for now; while savings are limited to this year’s budget, reports sugg...

Valuation and market update

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

Petrobras rig pool tender saw limited competition and likely supportiv...

Today, the Petrobras ‘rig pool’ tender for up to four deepwater rigs with 3-year duration across three lots closed. Initially, it appears that seven contractors with nine rigs participated, split between four locals (Constellation, Etesco, Foresea and Ventura) and three international contractors (Seadrill, Valaris and Transocean). Hence, the participation would be less than at the recent Petrobras tender for Sepia/Atapu, which saw nine contractors taking part with 15 rigs. With different technic...