While the renewables division pursues its development, the volatility in the oil markets has affected the oil & gas activities. H1 sales increased by 3% year on year, with management mentioning a wait-and-see stance from oil & gas operators. H2 looks more positive though, with Dietswell carrying out rig inspection work contracts awarded in H1.

Oil & Gas

Of note, the group has reactivated its subsidiary in Brazil and has been awarded five contracts for rig inspection work starting in H2. Dietswell has also signed its first contracts for the re-certification of Shenkai’s blow-out prevention equipment (BOP) in Germany and Thailand and signed a partnership agreement in Nigeria for the rehabilitation and management of offshore drilling rigs.

The press release mentioned the wait-and-see stance by operators, postponing campaigns, and suspending development projects until H2. Management expects the maintenance of ageing fields and/or the slowdown in US shale to sustain the recovery (of conventional oil & gas investments). We reckon the maintenance and rig inspection activities are likely to persist as the international rig count is showing signs of robustness. The latter is up c.20% yoy at 1,131 rigs (source: Baker Hughes), against a 20% decline for US rigs. We see this as positive and shows that the industry has adjusted its break-even levels during the previous downturn to withstand lower prices.

Renewables

Development continues in the renewables division (Dolfines), with the hiring of a senior commercial manager with an international profile. This is wise as it should increase the reach of the floater to the, more dynamic, global scene.

We will revise our forecasts to account for the slower growth in oil and gas.