reports
- Martin Huseby Karlsen
Another leg up in the US GoM
Demand for 2022/23 appears to be more than sufficient to keep the US GoM deepwater fleet working. In some demand scenarios, we even see a lack of available rigs, resulting in E&P companies potentially having to delay programmes. Dayrates have improved steadily over the past few months, and we see further improvement on the horizon and expect upbeat management teams at the upcoming earnings calls. We should see multiple contracts breaking the USD300k level, and with even higher levels being teste...
- Martin Huseby Karlsen
Tactical procurement process started by Equinor for harsh semis
Yesterday, Equinor launched a Request for Information (RFI) for harsh semis for Norway, Canada and the UK for several multi-year programmes starting in 2024–2026. On the one hand, it is positive for the drilling contracts that multi-year contracts with solid lead-times are becoming available. At the same time, we believe the process represents a once in a lifetime opportunity for stranded and stacked harsh semis. Hence, we believe the process will attract high interest, which could lead to more ...
- Martin Huseby Karlsen
Onshore and short-cycle behind most optimism
Schlumberger, Baker Hughes and Halliburton have now reported Q4 results, and as usual presented a relatively optimistic view of market recovery for oil services. Given current oil price levels, such outlook comments are more credible than earlier, in our view. Onshore North America (20–30% growth YOY) looks to be the primary driver for the optimism, but also international is set to follow with constructive comments on the Middle East and offshore (in particular Brazil). Pricing of services is se...
SOC SUBSEA 7 S.A.
SDRL SEADRILL LTD
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
ODL ODFJELL DRILLING
AKSOO AKER SOLUTIONS ASA
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
BWO BW OFFSHORE LIMITED
CGG CGG
AWDR AWILCO DRILLING
DRLCO DRILLING COMPANY OF 1972
NE NOBLE
BORR BORR DRILLING
MSEIS MAGSEIS FAIRFIELD
PRS PROSAFE
NODL NORTHERN DRILLING
SHLF SHELF DRILLING LTD.
VAL VALARIS LTD
- Martin Huseby Karlsen
Exxon and Chevron with muted offshore spending plans
Capex updates from Exxon (2022–2027) and Chevron (2022) yesterday. The headline conclusion: total capex (upstream, downstream, low carbon and chemicals) is up in 2022 for Exxon and Chevron by c36% and c20%, but there is less excitement for upstream offshore spending, especially in the long run, as low carbon spending is set to increase. Also, 2022 YOY percentage growth is driven by 2021 spending being revised lower, continuing the trend for current-year spending for several years. For Exxon, we ...
SOC SUBSEA 7 S.A.
SDRL SEADRILL LTD
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
ODL ODFJELL DRILLING
AKSOO AKER SOLUTIONS ASA
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
BWO BW OFFSHORE LIMITED
CGG CGG
AWDR AWILCO DRILLING
DRLCO DRILLING COMPANY OF 1972
NE NOBLE
BORR BORR DRILLING
MSEIS MAGSEIS FAIRFIELD
PRS PROSAFE
NODL NORTHERN DRILLING
SHLF SHELF DRILLING LTD.
VAL VALARIS LTD
- Martin Huseby Karlsen
Supportive sale of stranded drillship confirmed
Following recent reports, Samsung confirmed it has sold a stranded drillship to a European client for USD245m. We believe it is the ex-Ocean Rig Crete, one of the most capable drillships that has been ordered (referenced as an 8G drillship). Being Europe-based, we believe a potential buyer could be Stena Drilling (which has an ongoing arbitration appeal with Samsung). From a read-across to listed offshore drillers, we consider it positive from a valuation perspective but negative from a market b...
- Martin Huseby Karlsen
Noble (No_rec, TP: USD) - The new industry leader
The new industry leader With the Noble and Maersk Drilling combination, two of the most prominent offshore drillers join forces, creating a new industry leader with a capable and modern fleet comprising of 20 floaters and 19 jackups. The combined company is set to cover most geographies and have a diversified client base, and is estimated to realise USD125m in annual synergies. Due to DNB Bank ASA’s role in the transaction, we have withdrawn our recommendation and target price.
- Martin Huseby Karlsen
Deepwater preferred into 2022e
With Q3 reports due next week, we expect management teams to be upbeat on the deepwater market as we see dayrates establishing at the mid-to-high USD200k level for high-spec UDW rigs. On the other hand, the fragmented jackup market still appears to lack pricing discipline, and despite some incremental demand in the Middle East, we believe there is room for disappointment ahead. We keep Noble and Valaris as our best long ideas, while we remain muted on Transocean.
- Martin Huseby Karlsen
Petrobras UDW rig selection
For the Petrobras tender for high-specification UDW rigs, updates suggest that it has made a rig selection. The tender was split into two categories (with and without MPD) and called for a duration of three years with start-up in September 2022. As previously reported, Seadrill had presented the lowest bid in the MPD category, and updates now suggest that two Seadrill UDW 7G drillships, West Tellus and West Carina, have been selected. The rigs were offered at dayrates of USD230k and USD245k, res...
- Martin Huseby Karlsen
Noble (Buy, TP: USD34.00) - Re-rating seems well deserved
Having crystallised asset values well above implied valuation (and our NAV) through the sale of its four Saudi jack-ups and introduced impressive 2022e EBITDA guidance (c50% above our forecast and consensus), we believe Noble shares should re-rate further. Proceeds from the asset sale should result in a net cash position to enable shareholder distributions next year. Recent UDW market improvements have given us greater confidence in our 2022–2023 estimates thanks to its unique Guyana position. W...
- Martin Huseby Karlsen
Noble (Buy, TP: USD32.00) - Doubly impressive
Noble has announced a sale of its four premium jack-ups in Saudi Arabia for USD292m, above our NAV of USD261m and current implied valuation of USD188m. The premium achieved equals USD0.5 and USD1.6/share, respectively. In addition, it introduced 2022e EBITDA guidance of USD265m–300m, above our like-for-like forecast (excluding the four rigs to be sold) of cUSD180m. Hence, the mid-point is c57% above our forecast, and approximately similarly above adjusted Bloomberg consensus. We believe the sale...
- Martin Huseby Karlsen
Back to normal with Petrobras
In the three Petrobras tenders for low-spec UDW rigs that had bids due late last week, things were ‘back to normal’ compared to the solid dayrates in its recent tender for high-spec UDW rigs. Now, local (and Indian) contractors emerged as the low bidders and dayrates offered were mostly in the high USD100k/low USD200k, representing an expected downtick from the recent high-spec tender. Given the low technical specification on these tenders, interest was low from international contractors with on...
- Martin Huseby Karlsen
Noble (Buy, TP: USD32.00) - Well placed for further success
Having closed the Pacific Drilling transaction mid-April, merger-related items could affect the Q2 results. We forecast adj. EBITDA of USD23m (adding back contract amortisation revenues). We expect focus ahead to be on securing more work for the ex-Pacific Drilling UDW drillships, and believe Noble is well placed to add backlog around mid-USD200k dayrates. Noble is the most attractive offshore driller on earnings multiples in our view, and has compelling asset valuations. Having started sector c...
- Martin Huseby Karlsen
US GoM deepwater heating up
Following our US GoM deepwater market update in May, the positive trend in demand continues, and we expect further contract awards in the coming months. Based on the rollover profile, demand (both renewal and incremental) should be more than sufficient to keep the current fleet of warm rigs working in our view, and we see potential for incremental rigs to enter the region. Clean dayrates (for high-spec drillships) are mostly seen in the USD220k–250k range. Still, we believe higher levels are bei...
- Martin Huseby Karlsen
Higher rates for Petrobras tender
For a Petrobras tender for high-specification UDW rigs, bids were due on Friday. Unlike most other tenders, an international contractor (Seadrill), and not local contractors, provided the lowest bids. Dayrates were generally meaningfully higher than in recent Petrobras tenders, showing improved bidding discipline in the industry. For the likely awards in the tender, we see a clean rate level in the low USD200ks for 3-year duration starting late 2022, allowing for annual EBITDA generation of cUSD...
- Martin Huseby Karlsen
More detail on licensing round
Ahead of the white paper on Friday, the government provided more details on offshore wind development in Norway. The bottom-fixed areas will be developed without state-aid, and awards will follow an auction in early 2022. Floating areas will be awarded on qualitative criteria and receive government support (level not yet decided). Both areas will be split into 2–3 licences, which will allow multiple consortiums to be awarded. While we believe the planned sizes (in GW) allow for critical mass, th...
1Q6 PROSAFE S.E.
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
AKSOO AKER SOLUTIONS ASA
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
MSEIS MAGSEIS FAIRFIELD
- Martin Huseby Karlsen
Noble (Buy, TP: USD32.00) - Ahead of the relisting
Noble is set to begin trading on the NYSE tomorrow (9 June), following its current listing on the OTC market. We believe transitioning to a main exchange will help it reach a larger investor audience and raise investor awareness as well as improve trading volumes. In sum, we believe this may help it trade on a par with peers, or even at a premium, compared to its current discount valuation. To close the gap to its most relevant peer, Maersk Drilling, we see 33% potential upside on asset values, ...
- Martin Huseby Karlsen
Crowded and high-profile in Norway
The initial licensing rounds for offshore wind acreage in Norway are lining up to be competitive, with several high-profile local companies/consortiums already having announced their intention to participate. In addition, we would expect traditional renewables producers and international E&P companies to take part. Currently there is limited clarity on how the licensing process will work, but more details are expected in a government white paper (‘Stortingsmelding’) on 11 June. Although the winn...
1Q6 PROSAFE S.E.
PGS PGS ASA
DOF DOF ASA
SOC SUBSEA 7 S.A.
SDRL SEADRILL LTD
BWO BW OFFSHORE
PLCS POLARCUS LIMITED
ARCHERO ARCHER
AKER AKER ASA CLASS A
TGS TGS-NOPEC GEOPHYSICAL COMPANY ASA
E65F VALARIS PLC CLASS A
KVAER KVAERNER ASA
ODL ODFJELL DRILLING
AKSOO AKER SOLUTIONS ASA
DO DIAMOND OFFSHORE DRILLING INC.
RIGN TRANSOCEAN LTD.
TEC TECHNIPFMC PLC
SHLF SHELF DRILLING
CGG CGG
NODL NORTHERN DRILLING
A2JAU0 BORR DRILLING
AWDR AWILCO DRILLING
DRLCO MAERSK DRILLING
NE NOBLE
MSEIS MAGSEIS FAIRFIELD
- Martin Huseby Karlsen
Long-term UDW contract landed
Seadrill announced this morning it has been awarded the contract for Equinor’s Bacalhau development offshore Brazil. The contract is for the 7G UDW drillship West Saturn, to start drilling early-2022e, and has a 4-year duration. Based on the announced contract value, the all-in dayrate (including upgrades and integrated services) is USD260k, while we estimate the clean dayrate is around USD200k. Hence, we see an annual EBITDA contribution from this contract of USD15m–20m, plus potential bonuses....
- Martin Huseby Karlsen
- Martin Huseby Karlsen
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