Analysts at investment banking group Jeffries expects subsea and offshore contract awards to rise by 10% through 2022, despite quarterly declines early in the year.
In a note published Wednesday, analysts from the group’s oil services and equipment unit said they expect yearly growth for the segment to top 10%, even though Q1 2022 is likely to see a 12% decline on the previous quarter.
Jeffries forecasts $6.2 billion in global subsea and offshore awards in for Q1 2022, and approach roughly $30bn across its sample group.
The team has tracked quarterly subsea awards for major contractors since 2016 including Aker Solutions, Baker Hughes oilfield equipment, Technip FMC, OneSubsea, McDermott, Saipem offshore E&C and Subsea7.
In combination, these stocks create a proxy for global subsea and offshore capex. Full-year 2021 saw the value of the seven-stock sample increase by 26%.
It said order intake at TechnipFMC could approach $2bn this quarter, on the back of two major awards for iEPCI at Smorbukk Nord in Norway (valued at under $75m) and by Petrobras for EPCI of Buzios 6 worth $500-1,000m.
In addition, Exxon announced a final investment decision (FID) for Yellowtail, offshore Guyana on 4 April (the fourth FPSO development to FID on the Starbroek Block).
Technip FMC was awarded the subsea production system contract worth $500-1000m in Q4 2021, for inclusion in backlog when FID was reached, and Jeffries expects this to therefore be included in reported backlog for the Q1 2022.
Subsea7’s intake, meanwhile, is likely to fall below $1bn to around $800m – the lowest since Q1 2021.
Three awards were announced in the first quarter, totalling $350-650m, while one offshore windfarm inner-array cable installation award to its Seaway 7 for unit the He Dreiht windfarm offshore Germany, a project aiming to reach financial close in mid-2023.
Meanwhile, other offshore wind awards in the basket group have died down – Jeffries notes only one other offshore wind award in its sample group, with McDermott having won a contract for the BorWin6 HVDC offshore converter, which it estimates at $300-500m.
Jeffries also pointed to major subsea opportunities inbound over the next 24 months, citing data presented by TechnipFMC during a quarterly results call in late 2021.
The list includes several $1bn-plus contracts expected for developments such as Equinor’s Bay du Nord in Canada, Exxon Mobil’s Uaru project in the Stabroek block off Guyana, and Shell’s Bonga expansion off Nigeria.