SBM Offshore, a Dutch provider of floating oil and gas production vessels, raised its core earnings guidance on Aug. 9 citing clients slowly spending more on deepsea projects.

“Deepwater is becoming attractive again. It’s on a par from an economic standpoint with shale oil,” CEO Bruno Chabas said in reference to a recovery in spending which fell after a sharp drop in oil prices in 2014.

Due to low production costs, the shale oil market has attracted huge investments, especially in the U.S., and outperformed investor interest elsewhere in the oil market.

SBM Offshore said it expects its annual underlying earnings before interest, tax, depreciation and amortization (EBITDA) to top $750 million, having previously projected a figure of around $750 million. Its first-half EBITDA rose to $453 million from $322 million, beating the $411 million expected by analysts.

Analysts at KBC Securities, which rate SBM a “buy,” said its first-half performance was good and that the weak U.S. dollar had helped.

Oil producers are slowly starting to reinvest in deepwater projects as the market downturn has forced project developers to cut costs.

“In the coming few months or years the deepwater word is not a dirty word anymore. This is really where activity is going to restart and where opportunities will be,” Chabas said.

He said that ExxonMobil’s $4.4 billion Liza oil field off the coast of Guyana, for which SBM Offshore will provide the floating production vessel, was estimated to deliver a 10% return even if oil prices fall as low as $35/bbl. Brent crude is currently trading at about $52/bbl.

Recent huge gas finds off the coast of West Africa also bode well for deepsea development, the company said.

—Reuters

Offshore