Offshore & Marine Sector - UOB Kay Hian 2023-07-12: Mildly Weaker Oil Prices Belie Strength

• Strength in the global offshore marine industry in 2022 has continued unabated in 2023 as evidenced by data in this report.
• Offshore oil and gas capex is forecasted to continue growing y-o-y in 2023 and 2024, and with 176 production projects in the planning stage (of which nearly one-third are in the final design stage), the outlook for Seatrium (SGX:S51) remains bright. Additionally, demand/supply dislocation in the offshore renewables industry could benefit Seatrium.
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Strength unabated.

• Data across the offshore marine sector has not flagged but instead remained strong for jack-up rigs, deepwater floaters, floating production systems and offshore renewables.
• In the exploration and production sector, industry players are now looking at dayrates for latest generation drillships of >US$500,000/day vs aggregate rates of US$350,000/day at present. The number of active offshore rigs registered yet another m-o-m increase in Jul 23, and there are now 8% more active rigs compared to the year-ago period.

Firm outlook for oil industry capex.

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• The backlog for floating production and storage (FPS) systems has increased by 63% since its low in 1Q22, indicating that the material free cash flow generated by oil companies is being invested. While oil prices have come off their highs in 2023, we still note that Brent oil for delivery in 2028 is over US$66/bbl.
• In addition, we highlight that there are 176 projects globally in the appraisal, planning or bidding/final design stages, all of which will require floating production and storage systems which Seatrium is exposed to.

Tailwinds for offshore wind.

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Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-03-27 SGinvestors.io

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