NEW YORK – Evercore ISI’s Oilfield Services Equipment & Drilling Group has released an update regarding offshore greenfield investment.
“Rystad foresees $75 billion of offshore greenfield investment in 2015,” Evercore ISI’s note said, “which is expected to double by the end of 2017 to ~$150 billion, with the key growth driver rising oil prices due to an expected undersupply of oil in 2H 2016. [This] should then increase project sanctioning in a time window while unit prices are still low.”
The group noted that the projected 2017 figure would still be materially lower than the investment made in 2013 of around $225 billion. In the near term, Evercore ISI said that companies are continuing to make tough decisions, citing Statoil’s decision to exit Alaska following Shell’s recent exploration results in neighboring Chukchi Sea leases.
Sixteen of the leases are Statoil-operated, and the company will exit its stake in 50 leases operated by ConocoPhillips. Meanwhile the offshore driller group continues its efforts to preserve cash with Atwood Oceanics last week cutting its divided by 70% to just $0.075/share (from $0.25/share), pushing the yield down to ~2.0%.
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