Calmer beneath the surface A year on into the upcycle and we are, if anything, more confident in the outlook for the EU OFS sector into 2024. Shutting out the noise over the past year, from OPEC policy unfathomables and raised geopolitical risk to energy transition speedbumps, the sector continues its self-controlled recovery. OFS capacity has rationalised, discipline is holding and consequently the upcycle''s duration is extending. While previous big spenders exercise restraint, NOC''s are seizing the opportunity to monetise resources at speed, with ramp-up of multi-year capex programs underway. Offshore: the party''s only getting started, and it won''t be an early night Offshore installation backlogs have quietly recovered to prior cycle highs and with lower vessel capacity this time around and no newbuilds in sight, revenue visibility and pricing continues to improve. After 1.6x book-to-bill in 2023, we think SURF intake could be flat next year, securing high levels of activity into 2027 and beyond with average breakevens for ''24 FID prospects at $50/bbl. North America: no fireworks next year... and that''s a good thing for most An increasingly consolidated NAM client base should continue to keep discipline levels in check within the shale patch. We expect modest, mid-single digit increases in drilling activity to replenish the drawdown in DUC wells now back to 2014 levels, absent which forecast US oil production growth will be hard pressed to achieve. Higher activity, normalised distributor inventories and slowing imports provide a positive backdrop for Vallourec, with the NAM pricing headwind clearing. Valuation and ratings changes: sector remains cheap, VK upgraded to Outperform The sector remains cheap, trading at a 40% discount to the historical average. Vs EU EandPs, OFS is set to move from premium to discount on earnings multiples, with FCF yields overtaking the producers for the first time since 2015. We upgrade VK to Outperform on...