Subsea 7 SA climbed in Oslo trading after ABN Amro Bank NV recommended buying shares in the oilfield services provider as a growing order backlog improves the company’s earnings prospects.
Subsea 7 gained as much as 1.3 percent, the most in more than a week, and traded 0.8 percent higher at 140.9 kroner as of 3 p.m. local time, making it the best performer on the Oslo exchange’s OBX index today after Renewable Energy Corp.
Subsea 7 has won four orders together valued at more than $1.2 billion since the end of February, adding 13 percent to Subsea 7’s order backlog, ABN said in an e-mailed note to clients today. “Based on our new estimates, the shares are attractively valued,” said the bank, which upgraded its recommendation to buy from hold and increased its price target to 165 kroner from 135 kroner.
With established fields maturing and new finds becoming more difficult to develop, Subsea 7 is betting on rising demand for the subsea engineering services it offers. The London-based company operates projects around the world for energy companies including Statoil ASA, Petroleo Brasileiro SA and BP Plc.
Subsea 7 may also be the leading candidate for an $89 million pipe-lay contract in Mexico, Pareto Securities ASA said today, citing ODS-Petrodata, an industry consultant. “We expect that Subsea 7 has bid lower than Technip SA” because the company’s Borealis vessel will already be in Mexico for another contract and won’t therefore need mobilization, the broker said.
Shares in Subsea 7 have gained 6.7 percent so far this year, giving the company a market value of 49.6 billion kroner ($8.5 billion).