A Tender to Remember
Logging While Investing
OFS Weekly Analysis
39 pages, 30 exhibits
Link: sendspace.com
Bullet points:
Purchase bids submitted to Petrobras:
Contract drillers are to follow:
A positive for equipment manufacturers:
Rigs would only come in 2014-2018, but still negative for deepwater contract
drillers for now:
Now, the question is, will the bids "float"?; we expect plenty of commercial
wrangling first:
Excerpt:
Our take on the group. We see enduring value in exposure to non-NAM markets —and
we look for signs of spending growth to emerge more strongly after mid-year —which
continues to steer our preferences — now nearer term and longer term — to diversified
services, land-based construction, and strongly free cash-flowing offshore drillers.
Having said that, the Macondo disaster has the potential to meaningfully undermine
upstream spending momentum, most obviously in offshore markets. We await better
clarity of the impacts before recommending buying the group, despite the recent sell-off,
with our preferences within the group of onshore, oily exposed names. NOV is also
reasonably distanced from direct Macondo impact, in our view and has some
momentum in recent rig tendering progress in Brazil.
Our top picks, with investment theses unrelated to the well disaster are as follows. In
diversified service large caps, HAL (top pick) and SLB appear well positioned to
outperform in the nearer term, particularly with 1Q10 caution already being reflected in
shares. We prefer NE among drillers. And in European OFS, we favor the defensiveness
(including versus expectations) and backlog outlook for onshore-exposed names including
PFC.L. |
