Summary of Pareto Securities’ 31st Annual Energy Conference 2024

In the lead-up to, and throughout our two-day conference, we observed a noticeable increase in investor interest in the energy sector, as evidenced by a record-breaking 2000 participants and 1,800 investor meetings, marking a 30% rise from last year’s previous peak. 

Despite the subdued backdrop of soft oil prices, the overall sentiment was more optimistic than anticipated, with both E&Ps and service providers focusing more on resilience than growth. In the renewables space, developers emphasised hybrid projects, while there was heightened attention on funding, given the continued significant discount in public markets.

Focus Shifts to (Strong) Robustness in Volatile Times

The drop in Brent prices to a three-year low, just a day before the conference, led to a more cautious atmosphere. Most producers emphasised the robustness of their production bases, which continue to generate solid cahs flow at current price levels. For the majority, if not all, of the E&Ps, this remains sufficient to sustain current dividend distributions, although, as anticipated, there was less discussion of increasing dividends compared to last year.

Ongoing offshore developments typically have breakeven prices that are more than 50% lower than today’s oil price, with some participants noting that they hope increased volatility may open up opportunities for M&A activity.

High Confidence in the Upcycle, Newbuilds Emerging

No crack in the confidence of the subsea-exposed names, which have outperformed since last year on the back of higher estimates. Subsea 7 reportet its backlog is not only at a record high but also of high quality, supporting margin expansion above consensus estimates for 2026. With limited vessel capacity, this outlook extends to smaller service and vessel providers, all of whom reiterated an optimistic market outlook. This is driven by both oil and gas, as well as offshore wind, and the previous day rate gap has now closed. Speculative newbuilding has started from low levels within the PSV and subsea, initiated by Greek and Norwegian players, with several more projects reportedly in the pipeline.

Currently, listed companies are trading at 45-60% of the cost of a newbuild (and expected to be even lower by year-end 2027). Most companies find the risk/reward profile of newbuild investment unappealing and appear more focused on shareholder returns, much to the relief of investors. Within PSV and smaller AHTS, rig support activities have underwhelmed, and the strong day rate momentum could be tapering off as we head into winter.

Strong Momentum in Solar and Batteries

The levelised cost of energy from solar PV is rapidly falling, with polysilicon prices now at USD 4/kg, down from USD 40/kg two years ago. Similarly, the levelised cost of battery storage continues to decline. As a result, companies such as Scatec, Cloudberry, Magnora, and Orrön are witnessing growing momentum for hybrid renewable projects, combining solar PV with battery storage and wind.

Funding the growth through stable cash flows from operating renewable power assets while maintaining a strong balance sheet, was a recurring theme for the renewable independent power producers.

Multiple Public-to-Private Deals After Years of Depreciating Valuations

With weak share price developments for the third consecutive year, the public market has seen multiple cleantech companies taken private since last year's conference.

Lower capital cost in private markets, coupled with industrial willingness to build momentum in the industry, is leading the way - a common denominator for both carbon capture, hydrogen and energy storage sectors. Additionally, there is a general consensus among the presenting companies that stricter policies and demand-side incentives are necessary to propel clean technologies into the next phase of growth.

Our research analysts have summarised the key takeaways from all 162 company presentations at the conference. Access the reports through our research and online trading platform (general report and shipping report), or reach out to your contact person at Pareto Securities.