JPM says volatile macro drives concerns over oil firms' FCF, capex cycle
17/10/2024 12:30
** J.P.Morgan says macro volatility is driving concerns around
capex cycle and FCF in for European oil exploration and services
firms ahead of Q3 earnings season
** For oilfield equipment & services, it expects margins to
inflect in Q3 as contracts won at higher margins start to make up a
greater proportion of revenues and move into profit recognition
** For exploration & production, JPM sees solid operational
performance in the context of planned maintenance activity, while
the outlook for growth projects seems well defined
** It upgrades Aker Solutions AKSOA.OL to "overweight" citing
attractive tender pipeline and exposure to large projects in Norway
** It downgrades Subsea 7 SUBC.OL to "neutral" on concerns
about the sustainability of its high order intake given its exposure
to Brazil where capex could be lower
** JPM reinstates John Wood WG.L at "overweight" saying
positive pricing pressure should support margin and FCF expansion in
2024
COMPANY RATING OLD RATING NEW PT OLD PT
Aker Solutions overweight neutral NOK 61 NOK 56
John Wood overweight - 190p -
EnQuest ENQ.L overweight - 25p 30p
Tullow Oil TLW.L overweight - 50p 60p
Var Energi VAR.OL overweight - NOK 45 NOK 50
Saipem SPMI.MI overweight - EUR 3.20 -
Subsea 7 neutral overweight NOK 200 NOK 220
Aker BP AKRBP.OL neutral - NOK 280 NOK 330
Petrofac PFC.L neutral - 90p -
Technip Energies TE.PA neutral - EUR 26 -
(Reporting by Marta Frąckowiak)
((marta.frackowiak@thomsonreuters.com))