BNP sees growing challenges for oil sector, downgrades Subsea 7

SBM Offshore NV

09/09/2024 13:53

** Exane BNP Paribas warns of the impact of peaking demand,
increasing supply and the return of spare capacity from OPEC+ on
the oil sector, as it cites the latest medium-term outlook from
the International Energy Agency 
    ** OPEC+ plans to gradually increase oil production by 2.2
million barrels per day from December through 2025, BNP says,
while the IEA expects global demand for oil to reach its highest
point in 2029
    ** "We see risks to the oil sector firmly skewed to the
downside," the broker says
    ** BNP names Saipem  SPMI.MI  as its top pick, pointing to
"more resilient" gas focused contract awards for the Italian
group
** It downgrades Subsea 7  SUBC.OL  to "neutral" from
"outperform", saying the stock is fairly valued after the
Norwegian energy services firm reported strong Q2 numbers and
upgraded its outlook
    ** Subsea 7 trades at a 20% discount to its mid-cycle
EV/EBITDA ratio vs a 50% discount for Saipem, the broker adds
    ** Shares in Subsea 7 fall around 5% and are among the worst
performers on the pan-European STOXX 600  .STOXX 

(Reporting by Tilla Sjaavaag)
((tilla.sjaavaagmailto:gdansk.newsroom@thomsonreuters.com))