The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
I could well imagine that india is the next big thing and that the last big order could soon be followed by other billion-dollar contact in India.
Hitachi energy is already in an extremely strong position in India and has recently opened a new factory in Chennai to manufacture high-voltage direct current (HVDC) and power quality products. Hitachi energy is not only the technology leader, it also has executed more than half of the HVDC links in India.
https://www.energetica-india.net/news/hitachi-energy-opens-factory-in-chennai-to-meet-the-growing-electricity-demand
05 Apr 2023, 02:37 PM IST
"The Union government on Wednesday announced a plan to add 250 GW of renewable energy capacity in the next five years to achieve its target of 500 GW of clean energy by 2030.
In addition to this, the ministry has declared a quarterly plan of the bids for FY 2023-24, which comprises bids for at least 15 GW of renewable energy capacity in each of the first and second quarters of the financial year (April-June 2023 and July-September 2023 respectively), and at least 10 GW in each of the third and fourth quarters of the financial year (Oct-December 2023 and January-March 2024 respectively)."
https://www.livemint.com/industry/energy/indian-government-plans-to-add-250-gw-of-renewable-energy-capacity-in-next-5-years-to-achieve-500-gw-target-by-2030-11680685655723.html
I calculated that 1/3 of this is likely to be wind energy or 70-80 GW by 2028 and 100 GW by 2030.
and it should also be noted that China will not get any orders, because of the geopolitical situation in India.
Petrofac, on the other hand, is positioned in a perfect geographic location in Dubai only a stone's throw away from india
See also TenneT's HKZ Transformer Platforms in Dutch North Sea Hit Major Milestones:
"The HKZ Beta High Voltage Alternating Current (HVAC) offshore transformer platform with a 700MW capacity, and built by Petrofac and Drydocks World Dubai, will now be prepared for the connection to Vattenfall's wind turbines.:
hxxps://www.oedigital.com/news/495429-tennet-s-hkz-transformer-platforms-in-dutch-north-sea-hit-major-milestones
I don't think you have to be a fortune teller to see that the contract with Tennet is just the beginning of a bright future for Petrofac.
For me is Hitach-Petrofac a dream team destined to transform the world into a better, greener place.
Nothing is impossible when the best of Japan, Switzerland and the UK come together.
It's just unbelievable that we are still at around 65p I think this will change quickly Apollo would have to put 500p on the table and even this would not be enough and would probably be rejected.
This presumption has already been refuted.
WTI 80$ and Brent 86$ and probably by the end of the year up to 100$
"Oil Set to Post Weekly Gain as UAE Refutes Report of OPEC Exit"
Link: https://finance.yahoo.com/m/5b5942b2-de1b-310d-b279-1aff93b0a741/oil-ends-higher-after-u-a-e-.html
It is quite possible that the vacuum will soon be filled with dollars.
Quick reminder:
"Tullow said it anticipates underlying cash flow will come in at around US$1bn when its results are in, whilst free cash flow is expected at around US$267mln, which was above the company’s guidance.
During 2022, as energy prices soared, the company reduced net debt to around US$1.9bn at the end of the year, from US$2.1bn, and Tullow said it had around US$1.1bn of liquidity headroom.
"Strong operational delivery, rigorous focus on costs and capital discipline, the increased equity in our key operated fields in Ghana and higher oil prices drove material, expectation-beating free cash flow generation in 2022, accelerating the group's deleveraging towards a net debt to EBITDAX ratio of 1.3 times by the year-end,” said chief executive Rahul Dhir.
Looking to 2023, it meanwhile pitched its guidance at 58,000 to 64,000 boepd and said it would expect to generate some US$900mln of operating cash-flow (based on an average crude price of US$100 per barrel).
Beyond that, it models US$700mln to US$800mln of free cash generation for 2024 and 2025, based on an estimated oil price of US$80 per barrel."
Goldman's Currie Has High Confidence in Oil Price Spike in 12-18 Months
March 1st, 2023, 10:55 AM GMT+0100
Jeff Currie, global head of commodities research at Goldman Sachs, sees crude reaching back above $100 a barrel in the fourth quarter and says his confidence in an oil price spike in the next 12-18 months is “quite high.” He speaks with Francine Lacqua on “Bloomberg Surveillance Early Edition.” (Source: Bloomberg)
Link to the interview: https://www.bloomberg.com/news/videos/2023-03-01/goldman-s-currie-has-high-confidence-in-oil-price-spike-in-12-18-months
Watch for oil demand to soar to record highs this year and drive crude back up to $100, top energy trader says
"Oil demand could hit record highs later this year, according to Vitol CEO Russell Hardy."
Link: https://finance.yahoo.com/news/watch-oil-demand-soar-record-151607563.html
The opec has full control:
Link: https://oilprice.com/Energy/Crude-Oil/Pioneer-CEO-Sees-100-Oil-By-End-Of-Year.html
Just for information:
Analysts said the news of the offers would increase interest in the wider energy services sector, with Wood shares having shot up from below 150p to 200p after the company confirmed it had rejected approaches from Apollo Global Management.
Broker Peel Hunt noted: "This may provide a positive read across for Petrofac, increasing interest in the sector," they said.
Link: https://www.proactiveinvestors.co.uk/companies/news/1007242/wood-group-offer-will-increase-interest-in-energy-services-sector-broker-1007242.html
I have just found this interesting article.
Not a game changer, but constant dripping wears away the stone.
The Decommissioning Market Size was USD 4.8 billion in 2021 and should reach USD 8.30 billion by 2028.
With 7.6% CAGR, Offshore Decommissioning Market Size to Reach USD 8.30 billion by 2028
Link: https://www.investorsobserver.com/news/qm-pr/5269558535839728
There were delays in the awarding of contracts, so you can't even necessarily put a rope around Sami Iskander's neck.
Budget approvals sometimes take time, and sometimes you just lose out to a competitor who has a better offer, or who is satisfied with a lower margin.
What counts for me in the end is, that there is a positive outlook with a pipeline of US$68 billion scheduled for award in the next 18 months.
This pipeline includes submitted bids of US$5.5 billion, and a further US$1.5 billion in preferred bidder stage.
1.5/5.5x100=27%
A 27% share of submissions, even if they are received a few months late, would look great, wouldn't it?
This performance can of course not be continued in this way.
But even at only 10%, the backlog would be expanded to a very healthy 6.25 billion over the next 18 months, in addition to the existing backlog (about 2 billion?)
6.25/62.5x100= 10%
The deal with TeeneT Hitachi in the first quarter also seems to be just a formality.
Azvalor Asset Management SGIIC SA, 78,151,077, 14.996% seem to know this too.
I have rarely been in such a positive mood and the future can come.
Petrofac is an opportunity that normally comes along, only two, or three times in a lifetime. All that is needed is a little patience.
Price has decoupled from fundamentals and the resulting vacuum will soon be filled with invested dollars
Perhaps already tomorrow?
P/E ratio 2022 about 1.5
P/E ratio 2023 about 1.5
free cash flow of $700-800 million at 80/bbl for the two years 2024 and 2025
and debt under control.
Brent 83.4$ +3.5%
WTI 77.3$ + 4.3%
My prediction at the end of the year >= 70p
With a little luck end of 2024 >150p
Maybe I'm wrong, but I read a very interesting newspaper report, a few days ago stating that Petrofac is the preferred bidder for a major EPC contract in Saudi Arabia.
I could well imagine that the total sum of the two in this report mentioned facilities, could be around 1.5 billion.
The newspaper report, including some very interesting details: https://www.arabnews.com/node/2198851/business-economy
"In October, Saudi Arabian Mining Co. decided to increase the capacity of its phosphate production complexes located in Waad Al-Shamal and Ras Al-Khair industrial hubs"
" According to a MEED report, UK-headquartered Petrofac has secured the engineering, procurement and construction contracts for both facilities."
“Ma’aden received bids for the packages in May and, presumably, is in the process of finalizing budgetary approvals and other sanctions (with the Saudi government) for the project,” one source told MEED."
"Another source said: “It could be a while before the EPC contracts are awarded, but for now, Petrofac appears to be leading the race and is in discussions with Ma’aden.”
If I'm right it is only a matter of time before the first big contracts roll in and petrofac will rise like the phoenix from the ashes by the end of the year.
I see some other very strong reasons and plenty of opportunities to be invested in petrofac at the moment:
- Inflation seems to be under control
- IMF raises global growth forecasts for 2023 "https://www.weforum.org/agenda/2023/02/imf-raises-growth-forecasts-for-2023-and-other-economy-stories-3-february/"
- I'm just saying china is reopening sooner than expected!
- Underinvestment in the oil and gas sector for years. (see previous comment Saudi minister warns)
- Russia's Europe-centric oil and gas industry is in shambles and will never recover, nor can India and China replace it.
- Healthy total Group pipeline of US$68 billion scheduled for award in the next 18 months
- Dramatic increase in renewable energy (green deal 2050): Petrofac recently announcing contract awards and strategic partnerships to support Carbon Capture and Storage, Hydrogen, and waste to value projects.
- 2GW Project in colabaration with Hitachi, Marco Kuijpers, Director Offshore at TenneT: "We expect to award the full framework contracts for the HVDC Platform scope of all the 2030 Road Map projects in the first quarter of 2023, also with the other envisaged partners.”
- Decommissioning market (screaming opportunities for growth)
if i were a short seller, i would start to worry and move away where the sun doesn't shine, because it is only a matter of time that the first big contracts roll in.
As concequence a big short squeez in the next time seems to be very likely and the sewer rats will be burned like they do in the Indiana Jones movie.
If this will happen tomorrow, next week, next month or in a few months who knows, but it might already be too late to get out in a controlled manner.
Am I the only one, who sees the future potential of the announced collaboration with Hitachi, on behalf of TenneT?
In my opinion, this is not only a continuous incoming revenue stream until at least 2030, with the potential of a multiple by 2050, but more importantly a very big vote of confidence by two technology leaders (Hitachi and TenneT) in Petrofac's long-term capabilities.
What you should also consider:
https://energy.ec.europa.eu/topics/infrastructure/high-level-groups/north-seas-energy-cooperation_en#:~:text=NSEC%20was%20chaired%20by%20Belgium,least%20300%20GW%20by%202050.
"At the NSEC event in Dublin on 12 September 2022, the nine NSEC countries agreed in a Joint Statement to reach at least 260 GW of offshore wind energy by 2050, which will represent more than 85% of the EU-wide ambition of reaching at least 300 GW by 2050. The 2050 NSEC ambitions are complemented with intermediate targets of at least 76 GW by 2030 and 193 GW by 2040. "
The big question will be how much of this cake will go to petrofac and hitachi?
https://www.hitachienergy.com/ch/de/news/press-releases/2022/06/hitachi-energy-and-petrofac-to-collaborate-in-growing-offshore-wind-market
"Hitachi Energy pioneered HVDC almost 70 years ago and has delivered more than half of the world’s HVDC projects and more than 70 percent of the world’s voltage source converter (HVDC Light) installations. HVDC Light is the technology of choice for transferring power over long distances from offshore wind farms to the mainland grid."
Sami Iskander, Petrofac’s Group Chief Executive:
“TenneT’s 2GW Programme represents a key step in Europe’s transition to a lower carbon future. Petrofac is very pleased to be deploying its industry-leading offshore wind EPCI expertise, in collaboration with TenneT and Hitachi Energy, as we kick start the first two projects in the programme.”
What do you think about the potential of this collaboration?