The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Tekmar are facing strong competition from companies previously focused on O&G. More competition lower margins. The CPS failures reported by Orsted early in the year on Tekmar systems will no doubt have Developers mitigating risk and seeking other suppliers with pedigree as less risk. Competitors like First Subsea are winning work traditionally Tekmars main stay and subsequently expanding. They are even getting mentions in Boris Jobnsons linkedin account. https://www.linkedin.com/posts/first-subsea_renewablejobs-renewableenergy-offshorewindenergy-activity-6856264775396147200-8oQK
In the news today. Ørsted also said its Q1 results were impacted by a DKK 800 million (£93m) “warranty provision” related to cable protection system (CPS) “issues” at some of its offshore wind farms in the UK and Europe.
The fault, which the firm revealed could affect up to 10 of its developments, occurs when the CPS moves across the scour protection, such as rocks placed on the seabed.
In the worst-case scenario, it could cause the cables to fail.
The firm said it is taking “proactive measures” to ensure the long-term integrity of its assets by engaging in a “two-stage remediation approach” with “limited production downtime”.
Estimated to have a total financial impact of around DKK 3 billion (£350m) in total across the next two years, it’s hoped the work will remove the need to replace the cables.
https://www.energyvoice.com/renewables-energy-transition/wind/318844/orsted-cable-issues/
The PR on contract wins needs to be taken with a pinch of salt. Projects like Kaskasi and Neart Na Gaoithe are only for export systems which are low in qty. The Neart main project was secured by one of thier competitors. The ducting and single string projects are at best 5 figure awards. The CEO is making changes to the operating overheads and re postitioning the business to cope with the ever increasing competition as more O&G companies start to enter the renewables market, however this will take time align. I expect market demand will pick up in 2023 as the mega offshore projects are scheduled to be commissioned in 2024-5. It will be a bumpy couple of years before we start seeing good returns. I am keeping my fingers crossed it doesnt slide again
Wentworth have a good financial footing and understanding of the Mozambique market, this should good put them in a strong position when the less risk adverse institutions start to watch the Offshore infrastructure projects gain momentum, providing security in the area. Houston based Anadarko Petroleum APC has awarded construction projects to TechnipFMC, VanOord Anadarko's Mozambique LNG project. The work consists of subsea structures and an onshore LNG terminal. FID is expected late 2019. Word from the Offshore Drillers, is positive, reporting very high successful strikes, much better than UKNS & NNS. If Wentworth secure further capital I am sure further extensions will provide attractive low hanging fruit and the start of dividends will not be as far away as we think.
Is the current price a true reflection? I think it is. Tekmar had a long period where they were unopposed, with no genuine competition. When the O&G market slumped a number of EOM's developed alternative products that would bring the competition and in turn put significant pressure on Tekmar margins. These new market entries have just entered the market STO: TREL-B, Trelleborg AB, Balmoral Group Holdings and First Subsea, part of the First Tech Group. In order to protect market share Tekmar has dumped margin and it is going to be a tough ask to increase it any time soon. Hence their Chairman is forecasting another loss making year before turning to profit. Lets wait and see.