In recent months, there have been talks about green shoots in the Oil & Gas (O&G) industry with the gradual recovery in oil price. In particular, SembCorp Marine managed to sell 9 jack-up rigs to Borr Drilling for USD1.3B in Oct. Are O&G shipbuilders & rigbuilders finally poised for a long-awaited recovery?
The answer can be found in the industry value chain, because an upstream customer’s capital expenditure is a downstream supplier’s revenue. If the customer is increasing its capex, it means that the supplier will likely see increasing revenue in the coming quarters. Conversely, if the customer is decreasing capex, the supplier will likely see decreasing revenue subsequently.
In my last week’s post on A Peek into Offshore Support Vessel Companies’ Prospects, I listed the capital commitments of the various Offshore Support Vessel (OSV) companies listed on SGX. Their capex will have an impact on the …