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23 Nov 2020
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Saipem S.p.A. (SPM:MIL), 0 | Vallourec SA (VK:PAR), 0 | CGG (CGG:PAR), 0 | SBM Offshore NV (SBMO:AMS), 0 | Halliburton Company (HAL:NYS), 0 | SLB (SLB:NYS), 0 | John Wood Group PLC (WG:LON), 148 | Subsea 7 S.A. (SUBC:OSL), 0 | Tenaris S.A. (TEN:MIL), 0 | Petrofac Limited (PFC:LON), 23.0 | Aker Solutions ASA (AKSO:OSL), 0 | Baker Hughes Company Class A (BKR:NAS), 0 | CGG (0RI9:LON), 0 | Saipem S.p.A. (0RPI:LON), 0 | Vallourec SA (0NR2:LON), 0 | TechnipFMC PLC Shs Unsponsored Brazilian Depositary Receipt Repr 1 Sh (T1EC34:BSP), 0
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Questions, Questions, Questions...
Saipem S.p.A. (SPM:MIL), 0 | Vallourec SA (VK:PAR), 0 | CGG (CGG:PAR), 0 | SBM Offshore NV (SBMO:AMS), 0 | Halliburton Company (HAL:NYS), 0 | SLB (SLB:NYS), 0 | John Wood Group PLC (WG:LON), 148 | Subsea 7 S.A. (SUBC:OSL), 0 | Tenaris S.A. (TEN:MIL), 0 | Petrofac Limited (PFC:LON), 23.0 | Aker Solutions ASA (AKSO:OSL), 0 | Baker Hughes Company Class A (BKR:NAS), 0 | CGG (0RI9:LON), 0 | Saipem S.p.A. (0RPI:LON), 0 | Vallourec SA (0NR2:LON), 0 | TechnipFMC PLC Shs Unsponsored Brazilian Depositary Receipt Repr 1 Sh (T1EC34:BSP), 0
- Published:
23 Nov 2020 -
Author:
Konstantakis Nick NK | Thomson Daniel DT -
Pages:
29
With conference season in full swing and quarter end results coming to a close, we update our question banks for the fourteen oil services companies under coverage.
Key takeaway from 3Q20: visibility into 2021 still low, but things seem to have stabilised
After the ''hard landing'' earlier in the year, with customers curtailing their budgets and COVID-19 affecting their operations, 3Q20 was a period of relative stability for the sector. Cost savings plans are now place, protocols around the pandemic are established and discussions around the pace of execution on ongoing projects are completed. Whilst the recent vaccine announcement springs hope, visibility into next year''s project sanctioning and activity recovery remains relatively low.
Questions for 2021: pricing, activity, consolidation and portfolio actions
With the industry wide reset now in full swing, near-term activity levels, pricing pressure and consolidation are all important considerations. On the short-cycle side, both in NAM and internationally, we are looking for signs of activity recovery and rig count expansion. Long-cycle activity should remain subdued, with the industry talking to 150 trees in 2021, and indications of material project sanctioning picking up only in 2022. Meanwhile, portfolio restructuring actions should continue, ranging from disposal to spin-offs and potentially minority listings.
Energy Transition an ever pressing issue
The Energy Transition debate is set to further intensity. As we wrote in our re-initiation report, the ''future is green if you can seize it '', with companies in our coverage having exposure (in various degrees) to Solar, Wind (fixed and floating), Biofuels, Wave Energy, Hydrogen, Geothermal and CCS. An increasing number of questions arise around potential returns, future materiality and importantly the best way to monetize these businesses for shareholders, particularly as values for ''Green'' and ''Black'' continue to diverge.