Oil - Service, Equipment, Pipelines etc

[winston]

Oil rigs sector to see consolidation as rates fall

* Jack up rig rates expected to see sharp decline
* Prosafe Production: a shake-out would see stronger players

SINGAPORE, April 22 (Reuters) - The oil rig sector is likely to see consolidation as rates for renting out drilling rigs are falling along with weaker oil prices, industry experts said on Wednesday.

"We're going to see tremendous consolidation -- there's going to be three to four strong players that will dominate," said Per Didrik Leivdal, Chief Executive Officer of Pareto Securities Asia, a Norwegian financial services firm.

"I think jack up rig rates will face a significant decline in the next 6-12 months," he told an industry conference in Singapore. "There's a lot of idle capacity," he said, adding some firms had bought rigs at high prices of over $250 million on a highly leveraged basis.

He picked Rowan and Transocean , the world's largest offshore oil drilling contractor, as firms that could swallow up minor players that were coming under pressure from the weaker rates and a pullback in drilling of marginal oil fields.

Oil prices have slid under $50 a barrel, down nearly $100 from a record high hit last year, as the global economic slowdown cuts fuel demand.

"The oil price today affects small players and marginal fields," said Choo Chiau Beng, CEO of the world's largest offshore oil rig builder Keppel Corp , which has seen oil rig order cancellations and said it faces a challenging year.

Norwegian offshore driller Prosafe Production said a shake-out in the industry would lead to stronger players better able to deal with bigger and more complex projects, as oil exploration moves to tougher environments such as deepwater.

"For us to take on a $1 billion project alone requires us to take on too much risk," said Sven Borre Larsen, CFO of Prosafe Production. "We need to build larger entities to fill the demand from the industry."

[greenhoney]

hey dont forget deep drillers like diamond and noble! transocean has got huge debts on their books.

[winston]

Mainland oil plays appeal to analysts by Benjamin Scent, The Standard HK

Analysts have hiked their target prices for Chinese energy companies as the price of oil is expected to rise to US$80 (HK$624) per barrel by the end of 2010 on returning demand.

Goldman Sachs added offshore oil producer CNOOC (0883) to its "conviction buy" list and raised its target price to HK$13, from HK$11.35.

CNOOC will increase its production by 21 percent this year and 12 percent in 2010, Goldman Sachs analyst Kelvin Koh said. The company has one of the lowest cost structures and highest returns on equity in the sector, Koh said.

Goldman Sachs analyst Arjun Murti said the trough in the oil cycle has passed and a new upturn is underway. Crude oil has risen 26 percent since the start of the year and is now trading at US$68.44 per barrel.

( Was this the guy who called for US$200 Oil ? )

"We continue to believe that crude oil supply remains structurally challenged," Murti said.

( Big words .. )

Goldman Sachs raised its target price on CNPC (Hong Kong) (0135) to HK$4.40, from HK$3.95, on the back of higher oil price forecasts, and hiked its earnings estimates by 26 percent for 2009 and 17 percent for 2010.

Meanwhile, Macquarie analyst David Johnson said investors can benefit from rising crude prices and rising profits in the downstream sector by buying a basket of CNOOC and China Petroleum & Chemical Corp (0386), also known as Sinopec.

As CNOOC benefits from higher oil prices and Sinopec benefits from the new domestic pricing system introduced on January 1, the basket will outperform PetroChina "by a large amount," Johnson said.

He has an "outperform" rating on Sinopec with an HK$8.45 target price, indicating 45 percent upside from current levels.

"PetroChina would be the preferred investment only if you believe that crude is due to slide back and that refining margins in China may come under pressure again," he said.

[Aspellian]

Acergy wields the jobs axe
By Upstream staff

Subsea contractor Acergy is poised to axe jobs in Norway and the UK as upstream players slash investment.

“Due to the huge level of reductions in investments from oil companies, we currently have too much staff,” Oyvind Mikaelsen, regional vice president for Northern Europe and Canada told Upstream's sister paper Dagens Naeringsliv.

Mikaelsen did not confirm the exact number of staff the company will let go, but the paper said it believed between 70 and 90 jobs would go. Acergy currently employs about 700 workers in Norway and the UK.

“We are not the only ones who will have to make cuts,” Mikaelsen added.

“The industry has come to a stop. I understand that oil companies have to make some adjustments, but with the oil price currently around $74 per barrel it is strange that they do not see opportunities.”

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Tuesday, 25 August, 2009, 10:08 GMT | last updated: Tuesday, 25 August, 2009, 12:19 GMT

[Aspellian]

<Seems to me that its the Super-Oil-Majors that will continue to spend on capex aggressively. O&G service companies willl continue to benefit IF they have big projects from blue-chip oil companies>


AGR heeds Chevron's call
By Upstream staff

Services player AGR Subsea has been tapped by US supermajor Chevron to carry out integrated project management and engineering for the build, deployment and prove-up of a dual gradient drilling system.

In a statement released this morning, AGR said the new system has the potential to be what it termed "an enabling technology" for ultra-deep water assets globally.

It is estimated that the system will be deployed within 2011.
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Tuesday, 25 August, 2009, 09:46 GMT | last updated: Tuesday, 25 August, 2009, 09:46 GMT

_____________________
Technip takes plunge at Ozona
By Upstream staff
US independent Marathon Oil has opted to hand French engineering giant Technip a lump sum contract for the Ozona field development in the Gulf of Mexico.

[winston]

Isn't this expected and priced in the price already ?

===========================================

KEPPEL CORP , SEMBCORP MARINE - Brazil's Petrobras said it will launch tenders for 28 rigs this month to pump crude oil from deep-sea subsalt fields [ID:nN11458325].

JPMorgan said the move may result in a doubling of order books for Keppel and Sembcorp Marine as the two firms are among the 3-5 firms in the world with the size required for the job.

The two firms will also benefit from Petrobras' "made-in-Brazil" requirement as both have existing operations in the country.

[Aspellian]

Templeton buys 19.3% stake in Halcyon Energy for $13.5m

TEMPLETON Strategic Emerging Markets Fund III has acquired a 19.29 per cent stake in Halcyon Energy Corporation (HEC) for $13.5 million.

The Templeton fund's investment in HEC is in the form of redeemable convertible preference shares (RCPS).

These shares have a five-year maturity and will give the fund active involvement at the board level.

The fund is managed by Templeton Asset Management Ltd (TAML) and headed by TAML's chairman, Mark Mobius.

The proceeds will be used to ramp up HEC's expansion, particularly operations in the Brazil, Russia, India and China (BRIC) group of countries that has been earmarked for growth in the oil and gas sector.

HEC is a locally headquartered engineering and construction services provider for the offshore oil and gas industry.

'We are very excited as there is a continuing and increasing demand for oil, and along with it, an increasing need for oil and gas equipment. This will put HEC in a very good position,' Dr Mobius told BT yesterday.

This sentiment was shared by HEC's managing director in charge of strategic development, Robert Meyer. 'It is not a question of 'if' but 'when' the demand for oil and gas will increase. Because of the economic uncertainty, companies have deferred investment decisions over the last two years, and already there are signs of increasing momentum,' he said.

This momentum is set to take off next year, Mr Meyer reckons. 'We are quite confident that 2010 will be a very good year,' he said.

Both Mr Meyer and Dr Mobius are exceedingly bullish on the prospects of the BRIC nations.

'Brazil is doing very well. It has discovered deep offshore reserves, and a lot of equipment will be needed to reach these reserves, which is good for Halcyon. Russia has attracted many foreign oil companies and we've seen a pick-up in its economy,' said Dr Mobius.

'India will be growing at a rate of 6 per cent this year and gas has been discovered off its east coast, and China is the world's fastest- growing economy.'

Going forward, Dr Mobius said that Templeton will be eyeing strategic equity, in particular, chemicals in India and food processing and pharmaceuticals in China.

HEC, on the other hand, will not be ruling out an initial public offering (IPO). According to Mr Meyer, an IPO for the group might be in the pipeline within the next two years.

'The biggest thing slowing down an IPO is that we do not need capital right now. But it will definitely happen in the next two years, and there is a high degree of likelihood that we will list here,' he said.


www.businesstimes.com

[Aspellian]

Both articles from upstreamonline.

TOL: ST view vs LT view. haha...

Dismal outlook for jack-ups
A grim future for jack-ups was forecast today as industry pundits warned that the drop in shallow-water drilling seen this year and the large order book still to come into the market was unlikely to help steer a U-turn from current poor utilisation.

“One-third of the total jack-up fleet is available,” Sven Zeigler, partner at brokering company RS Platou, told the Trends in the Offshore Drilling Industry conference in London today.

“There are currently around 140 jack-ups not contracted, with 60 of these units stacked. Meanwhile, there are 165 units on order.

“As long as utilisation of jack-ups does not exceed 90%, dayrates will not go up. Dayrates are likely to stay close to operational costs."

Steve Robertson, the director of Douglas Westwood, supported this view.

“In 2009 (so far) there has been an 11% drop in shallow water drilling,” Robertson told the conference.

“Demand will be focused more on deep-water drilling,” he said, adding that Douglas Westwood forecast around 12% of total global demand to be supplied by deep-water drilling by 2015.

In terms of financial support from banks, the picture for the rig group was not any better.

“Banks don’t like jack-ups,” said Hugh Baker, head of shipping for Americas at HSH Nordbank.

“The jack-up market is more volatile - contracts are usually shorter and chartering is usually weaker,” he said.

“There is a much weaker environment for jack-ups.” Jack-up demand has been hit hard as oil prices tumbled from last year's peak over $140 a barrel. The US market has been hit particularly hard, with utilisation rates halving year-on-year.
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Tuesday, 29 September, 2009, 17:46 GMT | last updated: Wednesday, 30 September, 2009, 10:02 GMT

____________________________
'Brighter days ahead offshore'

Offshore capital expenditure is forecast to increase from last year's $260 billion to $360 billion by 2013 with the long-term outlook for the industry remaining bullish, market consultants Douglas Westwood said today.

“Leading indicators have been improving since the beginning of the year; our view is that offshore expenditure will ggrow,” Steve Robertson, the director of Douglas Westwood, told the Trends in the Offshore Drilling Industry conference in London.

“From 2011 onwards, delayed projects will come back into the market.” Robertson said deep-water drilling will see particularly strong demand growth. “There will be increasing reliance on deep-water drilling for supply,” he said, adding that the company forecast around 12% of total global demand will be supplied by deep-water drilling by 2015.

Robertson said demand from China being a key driver for oil demand fundamentals remaining strong.

“If China follows Korea’s path - as it has largely to date - oil demand will more than double in the next decade,” he added. Robertson questioned whether supply could meet this demand, with 66 out of 99 producing countries having reached their peak production by 2008.

“Peak oil is not a myth or a scare tactic, in our view it is very much a reality,” he said. Robertson’s optimistic view was supported by brokerage RS Platou.

Rig commitments in 2010 are forecast to go up by 25% compared to 2009 and, depending on the oil price, will vary between a 5% and 25% increase in 2011, partner Sven Zeigler told the conference.

The rig market has been hit hard over the past year following the sharp drop in the oil price.

“In 2008 there were 800 years worth of rig commitments made. This has dropped to around 400 years in 2009 - a 50% drop,” he said.

“The market is starting to turn around but it will take some time. Demand is starting to move up and my view is that current forecasts are usually a little conservative.” --------------------------------------------------------------------------------
Tuesday, 29 September, 2009, 14:01 GMT | last updated: Tuesday, 29 September, 2009, 19:08 GMT

[winston]

Not vested.

BUY OR SELL-Singapore rig makers: can orders chase share rally?

* Share prices have surged on hopes for new rig contracts
* Yards aiming to win orders from Brazil's Petrobras
* Some say order expectations too high, share rally overdone (For more BUY OR SELLS, click [BUYSELL/]

By Harry Suhartono SINGAPORE, Dec 16 (Reuters) - Singapore's rig builders have seen their order books fall sharply this year, but some analysts say a recovery is on the way as new contracts start to flow in with a pick-up in oil demand and exploration spending.

Keppel Corp , the world's largest rig builder, and rival Sembcorp Marine , saw orders slide 44 and 26 percent, respectively, by the third quarter from end-2008, with Keppel picking up just a few small orders this quarter.

But, even as orders have thinned, shares in both companies have more than doubled since early March on the prospect of improved order flow. The broader Straits Times Index <.FTSTI> has advanced 93 percent in that period.

BET ON NEW MAJOR ORDERS

Kim Eng Securities analyst Rohan Suppiah said there is room for Keppel and Sembcorp shares to rise further, especially as Brazilian state-run oil firm Petrobras plans to order 28 oil rigs, designed for deep-water exploration for its massive offshore subsalt fields, for 2013-18 delivery. [ID:nN11458325]

"What we've seen so far is that orders are mainly for vessels and repairs. We've not seen rig orders, so if we do see rig orders that would be the strongest catalyst for the share price," Suppiah said. "I think there's still room on the upside. We'll wait and see what Petrobras does in terms of their order tender.

Keppel Offshore Marine's CEO told Reuters in late-October that the company hoped to secure S$2 billion worth of orders, as oil prices return to levels that sustain exploration projects.

MARKETS EXPECT TOO MUCH

Not everyone is convinced a recovery will be strong enough to sustain the current rally and justify the rig builders' valuations and forecasts.

"The rebound in global orders for rigs is going to be smaller and later than people are expecting. Our argument is basically ... the expectations are too high," said Christopher Sanda, analyst at Daiwa Institute of Research.

"Both Keppel and SembMarine are burning through their order books quite quickly so they'd need to start getting new orders in large amounts and very soon to prevent earnings from degrading significantly in 2011."

In the past three weeks, Keppel has secured $434 million worth of orders, but this makes little impact on an order book that has dropped to S$6 billion by September from from nearly S$11 billion last year.

"Keppel just announced a $160 million deal. It would need that amount every week to prevent earnings from degrading," said Sanda.

Source: Reuters

[winston]

Not vested. From OCBC:-

Oil and Gas: 4Q09 results wrap

Summary: With the close of the 4Q09 results reporting season, we find that oil and gas companies under our coverage turned in a mixed bag of results.

The rig builders posted record-breaking results with the execution of their order books while Ezra Holdings posted decent results with good contributions from EOC. ASL Marine and KS Energy posted softer sets of results with the difficult environment, while Swiber incurred a net loss in the last quarter.
Despite the challenging environment, Yangzijiang performed well.

In the past quarter, the amount of news flow from the oil and gas sector remained significant, which is unlikely to abate soon. We maintain our OVERWEIGHT rating on the sector as industry fundamentals remain intact.

However, different parts of the oil and gas value chain experience different demand and supply dynamics, which should be kept in mind during stock picking. Our preferred picks are Sembcorp Marine [BUY, FV: S$4.58], Ezra Holdings [BUY, FV: S$2.54] and Keppel Corp [BUY, FV: S$9.93]. (Low Pei Han)