Sharp drop this morning for the stock Saipem in the wake of the news of a accident occurred in Australia. The Australian online newspaper WAToday, wrote that the multinational energy company Woodside would have disrupted the installation of a major offshore gas pipeline for its $18 billion Scarborough gas project after “a major accident on Monday night blew a hole in the pipeline.” There nave installer of Saipem group he would have “lost control of the Castorone gas pipeline he was installing off the Pilbara coast, forcing the evacuation of workers and damaging the pipeline,” writes the Australian newspaper. This would be the second serious safety incident on the ship this month.
Saipem: the damage to the ship is not significant and will be repaired
In a late morning statement, the energy infrastructure company confirmed that "an accident occurred on the Castorone cable-laying vessel off the coast of Australia during normal pipe assembly operations." The incident caused no injuries to personnel and there was localized damage to the main pipe which will be repaired. Saipem also added that the Castorone ship did not suffer significant damage.
Il Saipem title on Piazza Affari today it continued to lose ground and in late morning it recorded a loss of up to 10,87% at 1,35 euros. After Saipem's statement, the stock reduced its decline to around -9%. The next support is seen by chartists at 1,344. Resistance at 1,444.
Equita raises target price and 2024 estimates
In the morning, Equita announced in a press release that it confirmed the "Hold" recommendation, while it raised the target price to 1,75 euros per share (+3%) on the Saipem stock pending the publication of the results for the fourth quarter of 2023, which will be released on February 28th. Analysts expect performance in 4Q23 to continue to show a recovery of profitability thanks to the offshore business, but the low-margin projects of the backlog review still have an impact in the period. From the results call, among the topics to be explored in more detail, they highlightevolution of the pipeline of projects for the energy transition, updates on the LNG project in Mozambique (which is expected to restart at the end of 1H24) and the evolution of cash generation given the lower incidence of the backlog review. For FY24, Equita raised its EBITDA estimates by 3% based on the greater visibility resulting from the strong order intake in the offshore part in 4Q23.
The first gas shipment was expected in 2026
The Scarborough pipeline is a joint venture made up of Woodside Energy Scarborough (73,5%) and Bhp Petroleum (26,5%). The field is located in the Carnarvon basin off the coast of Western Australia and, according to what was communicated by Saipem on the occasion of the contract, it is one of the sources with the lowest carbon emissions globally. The delivery of the first gas load was expected in 2026, the start of operations instead took place in the first half of 2023.
While details on the value of each individual project have been released, analysts say Scarborough could be worth between $500 million and $800 million. Last week, Woodside said the Scarborough project was 55% complete and on track to start exporting gas in 2026.
Fears of increased costs, delays, compensation and reputation
It would be the second serious accident security incident occurred on the ship this month, it is reported. The Castorone had an earlier accident on January 2, when the vessel's uncontrolled movement was violent enough to rupture the pipeline.
For experts the accident clearly has negative impacts in terms of additional costs, linked both to the repair of the line but also to possible delays in completing the project. “Significant delays in starting the project could lead to requests for compensation for lost revenues", this is the main risk according to experts who believe that the accident could also have negative repercussions in terms of terms reputational, if it is demonstrated that Saipem did not comply with safety regulations in managing the works. In case of violation of security protocols, any insurance coverage of additional costs may be partial.
