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...

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.

Energy Morning - 1 November 2024

Transocean (Buy, TP: USD5.50) - Better positioned than peers

Despite increased uncertainty in the deepwater market, Transocean remains better positioned than peers for the coming years due to its high-quality fleet and service offering, backlog coverage and solid commercial capabilities. Due to these factors, and less downside to consensus than peers, we believe it deserves a premium valuation. We reiterate our BUY and USD5.5 target price.

Valuation and market update

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

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...

Petrobras set to reduce 2025 capex

Petrobras is expected to reduce 2025 capex from USD21bn to around USD17bn, according to a Reuters article today. Petrobras has a 5-year capex plan, but there are usually changes to its plans, and “current year” / “near-term” spending has a track-record of being revised lower (2024 capex was recently cut c24% to USD13.5bn–14.5bn), as Petrobras has struggled with value-chain delays. The updated spending represents YOY growth in 2025 of c21% (versus c50% earlier). The article mentions equipment pri...

Valuation and market update

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

Limited excitement for oil services from TotalEnergies’ Strategy & Out...

With total capex set to be flattish through this decade (organic capex lower in the out-years), TotalEnergies’ Strategy & Outlook presentation provided limited excitement for oil services. Strong capital discipline and allocation was maintained, with targeted oil production growth (3%) on flattish capex and shareholder returns being a top priority. With several large-scale developments for the next few years already defined (oil services mostly contracted), we consider its plan supportive for cy...

Petrobras deepwater awards at decent dayrates

Following a lengthy tender process, Constellation announced it has been awarded contracts for two rigs for the Roncador development with Petrobras for 2.5 years starting in mid-2025. One of the awards is for a stranded newbuild (Tidal Action), while the second award is for an incumbent 2012-built 6G drillship (Laguna Star). With current uncertainty among investors related to deepwater, we consider the dayrate levels (around USD450k) solid, in particular for the incumbent 6G rig. For companies u...

InsiderInsights Weekly Report: September 14, 2024

InsiderInsights Ratings of Companies with Open-Market Form 4 Purchases; Sales Filed at the SEC on the date above. We separate the real investment intelligence from the noise. Saving you time, and improving your research process