Commissioned Research: DOF

We believe DOF is well-positioned to take advantage of the upturn in the subsea market.

DOF has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company.

DOF Subsea awarded long term contract – Updated 01 June 2018

DOF announced today that its subsidiary DOF Subsea has been awarded a long-term charter contract for one of its larger construction vessels with commencement following the current contract, which expires in August 2019. The new contract will expire in April 2022, securing almost three years of work.

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Contract news flow is accelerating – Updated 15 May 2018

Sesonality hit harder than expected 

DOF’s Q1 results were weaker than we had anticipated as the results were hit harder by seasonality than we had accounted for in our estimates. As a consequence,management reported revenues were NOK ~1.7bn, 14% below our estimate, and management reported EBITDA landed at NOK 479m, 18% below our estimate. Lower utilisation in DOF’s subsea project fleet and a higher number of PSV vessels in a weak spot market were the main negative contributors to the results.

Accelerating contract news flow

Although the results were soft this quarter, the contract news flow has accelerated in the past couple of months. DOF Supply has secured several contracts, shoring up its utilisation rate and contributing to positive margins. In addition, DOF Subsea has won a three-year contract serving Skandi Achiever, with an estimated healthy EBITDA margin of almost 60% during the contract period. Management noted the higher OSV activity in the North Sea and Brazil and that tendering activity is on the rise in the subsea segment. In combination with oil prices trading well above cash break-even for oil companies and field break-evens, this should be supportive for the news flow ahead.

Estimate changes

We lower 2018E EBITDA by 8% mainly to take into account the Q1 results as well as our lower assumptions for Q2, given that management is cautious ahead of the quarter. However, recent contract awards prompt us to lift our revenue and EBITDA estimates for 2019 and 2020.

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Geared exposure to subsea recovery – Updated 11 April 2018

Global provider of offshore and subsea services

DOF is a global provider of offshore and subsea services to the offshore oil and gas industry through its fleet of 67 offshore service vessels. DOF’s AHTS/PSV fleet is relatively young and consists mainly of high-end vessels, which makes it well-positioned in the market, while its subsea fleet of pipelay-, construction- and dive-support vessels enables DOF to serve most of the subsea value chain.

Exposure to subsea recovery

We are now seeing an emerging upturn in the subsea market as several years of underinvestment draw to an end and field developments keep on hitting the market, prompted by reduced field breakevens and improved financials for oil companies. We believe DOF is well-positioned to take advantage of the upturn thanks to its mix of subsea project capability and time chartering of subsea vessels.


Based on our sum-of-the-parts and multiple valuation, we value DOF at NOK 0.95 -1.38 per share. The low end of the range is based on our fundamental sum-of-the-parts approach, grounded on DCF valuations of each subsidiary, while the high-end is based on the historical average sector multiple pre-downturn and DOF’s own median multiple of 8x.

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Conflict of interest

Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Issuer review

This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report. Completion date: 11 April 2018, 06:50 CET

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