Saipem Earnings: Firm on Track to Meet 2023 Performance Goals; Long-Run Prospects Remain Favorable

Saipem SPM continued on a solid growth trajectory in the third quarter as global offshore oil and gas activity continued to expand at a steady clip. Management confirmed the fiscal 2023 guidance it set in February, and we expect the firm will deliver similar performance in 2024. We maintain our no-moat rating and EUR 2.50 fair value estimate following the results.

Following a strong second quarter, revenues jumped another 9% quarter over quarter, this time with a significant contribution from Saipem’s onshore operations as several projects progressed through the backlog. Offshore drilling was overall flat, as standard maintenance and conversion activity for three vessels offset otherwise solid revenue growth. Three vessels have increased their rates since early 2022. We expect Saipem will continue to capture currently elevated day rates moving forward. Although it will take time for the fleet to transition, offshore vessel demand will remain very high over the next several years. High capacity utilization will persist, and with few capacity additions scheduled for delivery, little relief can be expected, thus preserving elevated day rates over the next few years.