Aker Solutions Climbs as Statoil Deal Eases Concerns: Oslo Mover

Aker Solutions ASA, the oil services company controlled by billionaire Kjell Inge Roekke, climbed to a two-week high in Oslo as a 5.5 billion kroner ($963 million) deal with Statoil ASA eased concerns about its order outlook.

Aker Solutions, based at Lysaker near Oslo, reversed an earlier loss and gained as much as 2.5 percent to 114.8 kroner, the highest intraday level since Feb. 14. The stock traded up 2.4 percent as of 11:50 a.m. in the Norwegian capital. More than 650,000 shares have been traded so far today, about 60 percent of the three-month average daily volume.

Aker Solutions was awarded a deal by Statoil for subsea operations on the Norwegian continental shelf, it said in a statement today. The value of the five-year agreement, which includes options for three further three-year periods, depends on factors including the number of projects Statoil decides to execute, the engineering company said.

“Aker Solutions has booked 5.5 billion kroner of order intake as a preliminary estimate of the work to be generated in the initial five-year period,” it said. Of that, 230 million kroner was booked in the fourth quarter of 2012, it said.

Aker Solutions slumped the most in almost four years earlier this month after saying profit margins shrank.

The company’s shares “took a significant hit after the fourth-quarter report due to concerns” about costs for its so-called Category-B drilling unit, Goeran Andreassen, an analyst at RS Platou Markets AS, said in an e-mail to clients. “The stock has since recovered part of the loss, but we still consider it a major buying opportunity.”

Biggest Spender

The company said it plans to position itself to become Statoil’s “preferred partner.” The energy producer, Norway’s largest oil and gas company, is responsible for about 55 percent of all spending offshore Norway, Aker Solutions estimates, citing data from Rystad Energy, an energy consultant.

Today’s agreement proves the company’s “strong position” with Statoil, said Andreassen, who has a buy rating and 135 kroner target price on Aker Solutions. “We also expect to see major international subsea contracts awarded to Aker Solutions over the coming months.”

With established fields maturing and new finds becoming more difficult to develop, demand is rising for the drilling and subsea services offered by companies including Aker Solutions, Subsea 7 SA, and Seadrill Ltd. Explorers operating off Norway, spurred by the biggest oil discoveries since the late 1970s, are estimated to increase investment in the country’s oil and gas industry by 15 percent to a record 207.8 billion kroner next year, according to Statistics Norway.

Aker Solutions plans to double sales by 2017 and is seeking to boost its margin on earnings before interest, tax, depreciation and amortisation to 15 percent from about 10 percent, the company said Dec. 6.