We recently attended IHS Petrodata’s seminar on the offshore oil and gas sector, and came away feeling positive on prospects of selected sub-segments of the industry. For the deepwater drilling market, day rates have recovered to 2008 levels, especially the ultra-deepwater segment. Rates for harsh-environment rigs have also been climbing. 2013 is also expected to see the development of more global oil and gas field projects, while sentiment on the OSV market has generally improved. In particular, average earned day rates in Asia Pacific are showing signs of an upturn, especially for AHTS vessels smaller than 6,000BHP in Indonesia and Malaysia. Maintain Overweight on the broader oil and gas sector, with Ezion Holdings [BUY, FV: S$2.35], Keppel Corporation [BUY, FV: S$12.68], Sembcorp Marine [BUY, FV: S$5.84], and Nam Cheong [BUY, FV: S$0.30] as our preferred picks.
Beneficiaries of healthy deepwater and harsh env rig market
We recently attended IHS Petrodata’s seminar on the offshore oil and gas sector, and came away feeling more positive on prospects of selected sub-segments of the industry. For the deepwater drilling market, day rates have recovered to 2008 levels, especially the ultra-deepwater segment. Rates for harsh-environment rigs have also been climbing. These are products that Keppel Corporation [BUY, FV: S$12.68] and Sembcorp Marine [BUY, FV: S$5.84] specialise in, and their established track records put them in good stead to secure more orders. Meanwhile, in addition to more stringent requirements for BOPs, more operators are also requesting for second BOP units for rigs. A direct beneficiary is MTQ Corporation [Unrated].
Development of more offshore fields
2013 is also expected to see the development of more global oil and gas field projects. Key near term trends include increased contract flows, increased backlogs of EPC work, and more marginal field development. Ezion Holdings [BUY, FV: S$2.35]charters service rigs and liftboats to various parts of the world, and also provides offshore logistics and support in Australia, one of the growth areas going forward.
Signs of an upturn for AHTS vessels <6,000BHP in SE Asia
Compared to a year or two ago, the sentiment on the OSV market has generally improved. Average earned day rates in Asia Pacific are showing signs of an upturn, especially for AHTS vessels smaller than 6,000BHP in Indonesia and Malaysia.Marco Polo Marine [BUY, FV: S$0.56] is one of the few companies with good exposure to the OSV sector in Indonesia, while Nam Cheong [BUY, FV: S$0.30] is a direct beneficiary of Petronas’s capex plans in Malaysia.
Maintain Overweight
IHS has revised its 2013-2014 oil price forecast upwards – it now expects Brent crude to average US$105/bbl in 2013 and US$93/bbl in 2014, sustaining capital expenditure in the sector. Maintain Overweight on the broader oil and gas sector.
We recently attended IHS Petrodata’s seminar on the offshore oil and gas sector, and came away feeling more positive on prospects of selected sub-segments of the industry. For the deepwater drilling market, day rates have recovered to 2008 levels, especially the ultra-deepwater segment. Rates for harsh-environment rigs have also been climbing. These are products that Keppel Corporation [BUY, FV: S$12.68] and Sembcorp Marine [BUY, FV: S$5.84] specialise in, and their established track records put them in good stead to secure more orders. Meanwhile, in addition to more stringent requirements for BOPs, more operators are also requesting for second BOP units for rigs. A direct beneficiary is MTQ Corporation [Unrated].
Development of more offshore fields
2013 is also expected to see the development of more global oil and gas field projects. Key near term trends include increased contract flows, increased backlogs of EPC work, and more marginal field development. Ezion Holdings [BUY, FV: S$2.35]charters service rigs and liftboats to various parts of the world, and also provides offshore logistics and support in Australia, one of the growth areas going forward.
Signs of an upturn for AHTS vessels <6,000BHP in SE Asia
Compared to a year or two ago, the sentiment on the OSV market has generally improved. Average earned day rates in Asia Pacific are showing signs of an upturn, especially for AHTS vessels smaller than 6,000BHP in Indonesia and Malaysia.Marco Polo Marine [BUY, FV: S$0.56] is one of the few companies with good exposure to the OSV sector in Indonesia, while Nam Cheong [BUY, FV: S$0.30] is a direct beneficiary of Petronas’s capex plans in Malaysia.
Maintain Overweight
IHS has revised its 2013-2014 oil price forecast upwards – it now expects Brent crude to average US$105/bbl in 2013 and US$93/bbl in 2014, sustaining capital expenditure in the sector. Maintain Overweight on the broader oil and gas sector.
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