*MAIRE TECN – Downgrade to EW from OW. Lower PT to €3.30 from €3.60
*GULF MARINE (OW) Lower PT to 185p from 200p
*PETROFAC (OW) Lower PT to £13.20 from £14.00
*TECHNIP (OW) Lower PT to €72.00 from €76.00
*WOOD GROUP (OW) Lower PT to £7.70 from £7.80
*HUNTING (EW) Lower PT to 410p from 485p
*PGS (EW) Lower PT to NOK45.00 from NOK50.00
*TECNICAS (EW) Lower PT to €46.00 from €50.00
*AKASTOR (UW) Lower PT to NOK13.90 from NOK14.00
*AKER SOLUTIONS (UW) Lower PT to NOK41.00 from NOK44.00
*CGG (UW) Lower PT to €3.90 from €6.20
*SAIPEM (UW) Lower PT to €8.40 from €9.00
*SUBSEA 7 (UW) Lower PT to NOK82.00 from NOK84.00
*TGS (UW) Lower PT to NOK170.00 from NOK177.00
2016 is likely to be much of the same for the European Oilfield Service (OFS) industry as a large portion of its client base comes to terms with spending limits that are much reduced from what once was. Indeed, the most notable point is oil industry capex, which is likely to be down for a second year in succession, the first time since we began tracking it in the mid-'80s. As such, what little work is available is likely to be competitively bid and the delivery of the self-help programmes initiated in 2015 is likely to be a key determinant of performance. However, as we work through the year, we believe we will see a concerted effort to make the best projects viable, and at some stage the confluence of project delays, robust demand and the often forgotten decline rates mean that a tighter oil market is inevitable. At that point, we believe investors would be unwise to be underweight the energy complex, the risk of which could lead to significant share price upticks as it did twice in 2015. More important, the next dawn is less likely to be false. In such a scenario we remain Positive on the sector, excepting gradual improvements from here. Our recommendations remain focused on the more defensive stocks, those with backlog or those less exposed to the more extreme self-preservation measures of Big Oil. Our Top Pick remains Petrofac and the only change in rating is a downgrade on Maire Tecnimont to Equal Weight based on relative upside potential.
European Oil Services & Drilling: Not so sweet '16