全球油田服务：马士基为何是拥有钻井平台的公司.docx

6 December 2019/卜 HSBCGlobal ResearchTHIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINAGlobal Oilfield ServicesEquitiesEnergy Equipment & ServicesDeep liquidity: Why Maersk is the rig player to ownGlobalMarket characterised by liquidity concerns and rising rig bond yields; our analysis shows worsening risk profiles forNE/VAL We take a cautious view on the pace of recovery in offshore rigs via lower utilisation and dayrate assumptionsCut TPs and estimates; downgrade VAL, NE, COSL-A to Reduce and BDRILL, DO to Hold; Buy on DRLCO and RIGtarek.solimanhsbc +44 20 3268 5528Employed by a non-US affibate of HSBC Securities (USA) kncv and is not registecod/ qualified pursuant to FINRA rogutatonsIssuer of report: HSBC Bank PteThis video must bo viowod with the disdosuros and cortQbons and with tho dtsdamor. onthobnk attached to this mecSa playerTarek SolimanAnalystKey theme - liquidity risks: The markets focus on liquidity risk is evident from rising driller bond yields (in some cases rising to the mid-teens). The rig sector has de-rated significantly (shares down over 50% so far this year), implying a large valuation gap if the markets recovery expectations are realistic. But we've seen only a gradual pick-up in market fundamentals; dayrate recovery now looks markedly slower than we expected in mid-2019. We also expect a slower pick-up in overall demand leading to lower utilisation. On our new estimates, the rig sector doesn't as a whole generate positive FCF until 2022. Our liquidity analysis highlights VAL and NE, as particularly vulnerable, with RCF drawdown of over 50% potentially in the next 12-18 months. In this environment of heightened sector liquidity risks, we prefer relatively resilient names such as DRLCO (robust balance sheet and FCF positive) and RIG (top end fleet with strong backlog).Forecast changes: We lower our dayrate / utilisation estimates, especially for ultradeepwater. On average, our EBITDA forecasts are down by 46% for 2019, 22% for 2020 and 13% for 2021 一 we are 5-6% below consensus EBITDA for 2020/21. We raise our cost of capital to reflect credit risks and lower our rig asset values; on average, our DCF values are lower by 57%, and our RMV by 55%. Across the group, our TPs are 34% below the street (more for VAL, NE, less for DRILCO, DO).Investment views: We prefer Buy-rated DRLCO and RIG, on balance sheet flexibility, positive FCF, fleet quality and backlog cover. Liquidity risks look highest for VAL and NE, which we downgrade to Reduce in this report. With other rig-exposed names in the sector, we have Buys on COSL-H and SPM.Abhishek Kumar*AnalystHSBC Securities and Capital Markets (India) Private Limited abhishek.kumarhsbc.co.in+91 80 4555 2753Tarek Soliman*, CFAAnalystHSBC Bank plctarek.solimanhsbc +44 20 3268 5528David Phillips*Head of Equity Research, Developed EuropeHSBC Bank plcdavid.1 .phillipshsbc +44 20 7991 7558Thomas C. Hilboldt*, CFAHead of Resources & Energy Research, Asia PacificThe Hongkong and Shanghai Banking Corporation Limited thomaschilboldthsbc .hk +852 2822 2922Anshak Singhal*AssociateBangalore* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulationsCompanyTickerCurr.Current PriceMCap (USDm)Old Rating New RatingOld TPNew TPUpside/ _ Downside_EV/EBITDA (x) 2019e2020ePB (x)2019e2020eTransoceanRIG USUSD5.03,047BuyBuy12.05.918.5%14.511.50.30.3DiamondDO USUSD5.7778BuyHold11.25.70.9%36.217.00.20.3NobleNEUSUSD1.1264BuyReduce2.60.3-71.7%12.813.30.10.1ValarisVAL USUSD4.3843BuyReduce17.53.4-20.2%75.024.50.10.1Borr DrillingBDRILL NONOK59.9730BuyHold134.064.06.9%NM19.10.50.6Maersk Drilling DRLCO DCDKK410.62,517BuyBuy637.0546.033.0%9.27.50.70.7China Oilfield-H 2883 HKHKD10.59,461BuyBuy13.5713.5728.7%8.87.01.21.1China Oilfield-A 601808 CHCNY16.79,461HoldReduce12.5312.18-27.0%8.87.02.12.0SaipemSPM IMEUR4.154,627BuyBuy5.205.2025.3%4.24.21.01.0Key investment ratings and valuationsNote: Current prices as of close 29 November 2019. Source: Bloomberg, HSBC estimatesDisclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.Issuer of report: HSBC Securities and Capital Markets (India) Private LimitedView HSBC Global Research at: s :/ research, hsbc. comValarisReduce TP USD3.4Valaris (VAL US): Downgrade to Reduce from Buy, TP USD3.4 (from USD17.50)The mergers with Atwood and Rowan have improved VAL's fleet mix giving it solid exposure to the harsh environment jackup market in the North Sea. But it also created problems for VAL. Its debt has grown significantly and it also saddled VAL with several unemployed rigs (leading to a higher operating cost). VAL currently needs around USD1 bn over next three years (negative free cash and debt obligations). Even if we assume complete drawdown of USD1.6bn RCF, VAL will need another USD300m in 2022, while its RCF is up for renewal in 2022. VAL may need other source of financing which could either mean a sale of some of its assets or a capital raise, both of which are dilutive for existing shareholders. Furthermore, we think VAL's contract coverage going into 2020 is low and that also presents a risk. Given the risks related to liquidity and contract coverage, we downgrade to Reduce from Buy.Other companies with substantial offshore drilling exposureSaipem (SPM IM, CMP EUR4.15): Rated Buy, TP EUR5.20SaipemBuy TP EUR5.20SPM has an offshore fleet of 12 rigs with exposure to both shallow and deep water. Our RMV calculations suggest a value of USD1.34bn.This translates to a value of EUR1.21bn, or EUR1.20 per share. SPM is our preferred name in subsea OFS, despite our expectation of flat offshore orders and revenues (EUR4bn out to 2022) over 2020-21, its recent USD880m SURF award with ExxonMobil in Guyana effectively takes it to its 1 x B2B target for 2019. The continued backlog growth in the Onshore E&C business provides increasing top-line visibility out to 2022 (significant YTD orders include USD6bn Mozambique LNG, USD3.5bn Saudi Aramco, EUR2.2bn Arctic LNG and a possibility of an Nigeria LNG award in 2019 remains). We conservatively value this segment at 0.3x sales, but using peer multiples of 0.4-0.5x we could see a higher fair value of EUR1 per share.Saipem: Rig market value summary tableDetailsUSDmRig Steel ValueU75Present Value of Contracts61Rig Market Value (RMV)1,336Source: HSBC estimates, Data as on November 2019COSL H/A Buy/Reduce TP HKD13.57/RMB12.18China Oilfield Services (2883 HK, CMP HKD10.54 /601808 CH, CMP RMB16.66): Rated Buy/Downgrade to Reduce, TP HKD13.57/RMB12.18A significant part of COSL is focused on offshore drilling and its fleet of 52 rigs (both shallow water and deep water). Our RMV calculations suggest a value of USD4.2bn for COSL's fleet.COSL is an important global Oilfield Services (OFS) provider, 54%-owned by parent CNOOC Group, a Chinese state-owned enterprise. COSL's business outlook in part depends on cash flows, profitability and the capital spending of its sister company, CNOOC Ltd. (883 HK, CMP HKD11.36, Buy). It also depends on other global upstream oil and gas companies in regions outside China, particularly for COSUs more diversified drilling segment. As of 1H19, COSL operated and managed a total of 52 drilling rigs (of which 38 were jack-ups and 14 were semisubmersibles), and 5 module rigs. Our Buy rating on the H-shares is supported by our expectation that improvement in fundamentals will likely continue, at a pace faster than we previously expected, and that the stock price should move along, or even ahead of, fundamentals. The key positive drivers are an increase in industry upstream exploration, development and operating activity levels, especially from CNOOC, as a result of the government mandate to increase energy independence. The company has positive operating leverage to higher asset utilisation rates, particularly when utilisation moves above 90%. It improved to 90% in 3Q19 (81 % in 9M19) from 64% in 1H18, while it used to be over 90% during 2007-2014. See our most recent note: China Oilfield Services (2883 HK/601808 CH) Buy H/Hold A: 3Q19 beat aaain: faster-than-exoected recovery warrants hiaher valuation, 31 October 2019.COSL: Rig market value summary tableDetailsRig Steel ValuePresent Value of ContractsRig Market Value (RMV)USDm37255004225USDm37255004225Source: HSBC estimates, Data as on November 2019HSBC Global Oil & Gas Research Recent ReportsOil & Gas MacroUS Tight Oil Outlook: Production, productMty and producer pain (30 October 2019)Oil things considered: Risk premium what risk premium? (18 October 2019)Oil Markets: Attacks hit Saudi crude supply (15 September 2019)Oil market outlook: Cutting price deck 2020 looks challenging (10 September 2019)European and Global Gas: Prices have trouqhed, but no recovery until winter (15 July 2019)Fuel for thouaht: Oil in a multi-asset context (25 April 2019)Global LNG: on the cusp of a cew boom (14 February 2019)Oil & Gas - Developed marketsTullow OH: Sentiment soured bp crude quality issues (22 November 2019)Global Integrated Oils: Cash distributions in focus as weak macro hurts (7 November 2019)Oil Majors 3Q preview: Sector outlook intact desp计e macro headwinds (14 October 2019)European E&Ps: Factoring in lower oil price deck (04 October 2019)Total (FP FP): Masterfully balancina priorities at USD60/b (11 September 2019)BP and Royal Dutch Shell (11 September 2019)Tullow OilW LN): Exciting discovery, but East Africa drags (13 August 2019)Global Oilfield ServicesGlobal Oilfield Services: Offshore OFS: fewer places to hide from a lacklustre 2020 127 November 2019)Global ONfield Services: The value lies in 'International' (ex-US) exposure (8 November 2019)Wood Plc (WG/ LN): Cantal markets day to close out final 'trans让ion' year? 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(8 May 2019)Oil & Gas - Emerging markets, Russia & CEEMEALukoil (LKOD LI): Home, sweet home (28 November 2019)Rosneft 0/4。(ROSN LI): Borin。is good (21 November 2019)Saudi fuel retail: What a journey ahead (18 November 2019)Gazprom (OGZD LD： Price mav have bottomed but volume likely not (18 November 2019)Tupras (TUPRS 77): Conflictinq market signals (11 November 2019)Novatek 04。(NVTK LI): Stronqer LNG revenue in 2020e (04 November 2019)_ADNOC Distribution (ADNOCDIS UH): Preparing for stronqer 2020 (01 November 2019)Russian oils: What is in the Russian oil barrel? (2 September 2019)Oil & Gas 一 Emerging markets, AsiaChina Oilfield Services: Entering a sustainable growth phase (25 November 2019)PTT Plc (PTT TB): Losing balance (19 November 2019)India Telecoms: Outlook is qettinq better for the industry (19 November 2019)S-Oil (010950 KS): NDR - investors are not confident but we are (18 November 2019)Oil & Gas - Emerging markets, Latin AmericaPetrobras PN (PETR4 BZ): HSBC 2019 Global Investment Forum takeaways (7 November 2019)YPF and Pampa : Cuttinq TP and estimates on pricing uncertainty; (22 Oct 2019)Ecopetrol (EC US): A foot in the US Permian (11 Sept 2019)Braskem: Not there yet, wait until 2020 (16 July 2019)Ultrapar and BRD - Reviewing near-term catalysts (10 April 2019)HSBCDownside2019e2020e2021eP/B 2019eP/B 2020eP/B 2021e18.5%14.511.510.30.30.30.30.9%36.217.016.40.20.30.3-71.7%12.813.39.30.10.10.1-20.2%75.024.511.70.10.10.16.9%0.019.19.40.50.60.633.0%9.27.55.40.70.70.7NA6.35.55.40.60.60.628.7%8.87.05.61.21.11.0-27.0%8.87.05.62.12.01.825.3%4.24.23.81.01.00.918.717.611.78.30.70.7Upside / EV/EBITDA- EV/EBITDA- EV/EBITDA.p UOOOOA78OT 7/ 3 4 o o M 5 1 2仅5411NameTickerLocalCurrencyLatest PriceMarket Cap (LCm)Market Cap (USDm)RatingOffshore DrillersTransoceanRIG USUSD4.9830473047BuyDiamond OffshoreDO USUSD5.65778778HoldNoble CorpNEUSUSD1.06264264ReduceValarisVAL USUSD4.26843843ReduceBorr DrillingBDRILL NONOK59.896724730HoldMaersk DrillingDRLCODKK410.60170532517BuyOdfjell DrillingODL NONOK25.446024654NRChina Oilfield H2883 HKHKD10.54740739461BuyChina Oilfield A601808 CHCNY16.68665339461ReduceSaipemSPM IMEUR4.1541964626BuyDrillers: global valuationDrilling Segment AverageSource: Refinitiv Eikon. HSBC estimates, Priced as on 29 November 2019EquEes Energy Equ-pmem g Services 6 December 229Liquidity risks decodedLiquidity and refinancing are big concerns for drillers in the near to medium term as most of them are FCF negative Elevated bond yields indicates sustained market nervousnessValaris and Noble look most vulnerable from liquidity perspective; Maersk best placed along with DiamondLiquidity under the spotlightDrillers, liquidity under the spotlight, especially given negative FCF until 2021/22Drillers, liquidity under the spotlight, especially given negative FCF until 2021/22Liquidity conditions and the ability to refinance debt are key market concerns for the offshore drillers. A lack of support from underlying market conditions and a slow increase in dayrates, implying lower cash flow, are amplifying these concerns. Yields for most of the debt issued by offshore drillers are at an elevated level reflecting to some extent these risks.We look at current liquidity conditions for the drillers we cover. Our analysis suggests that the most vulnerable are Noble and Valaris, as both of them could draw more than 50% of their RCF in the next 12-18 months.Drillers: RCF drawdown as % of RCFSource: HSBC estimates2020e2021 e2022eRIG0%13%18%DO6%14%16%NE55%63%67%VAL37%60%naWe highlight that our credit research team has a mildly bearish view on US