Strategic Entry Points for Investors in Norway's Resilient Subsea and Drilling Service Firms Amid Sector Slowdown

Norway's oil and gas sector is undergoing a strategic recalibration in 2026, marked by a shift from exploration to production and subsea development. While exploration drilling is projected to decline by 18%-with companies like Equinor planning to drill 26 exploration and appraisal wells in 2026- the focus is increasingly on maintaining output from existing fields and extending the life of mature infrastructure. This transition creates unique opportunities for investors targeting subsea and drilling service firms, which are less impacted by the broader industry slowdown and positioned to benefit from long-term operational resilience.

The 2026 Investment Landscape: A Mixed Outlook

Total oil and gas investments in Norway are estimated at NOK 249 billion for 2026, an 8.4% increase from previous forecasts, driven by higher development costs and new discoveries. However, this growth is uneven. Exploration drilling, a key driver of volatility, is expected to see reduced activity with 37 wells planned in 2026 compared to 45 in 2025. Meanwhile, production drilling and subsea field development remain priorities, supported by Norway's role as Europe's largest natural gas supplier. The Norwegian Offshore Directorate forecasts steady gas output through 2027, bolstered by fields like Troll and new subsea projects.

The government's 2026 budget reflects this duality. While overall investments are projected to fall by 4% to NOK 270 billion, subsea service providers and drilling rig operators are expected to face less disruption than firms involved in major platform construction. This divergence underscores the sector's evolving dynamics, where resilience is concentrated in firms with expertise in maintenance, subsea infrastructure, and production optimization.

Subsea and Drilling Service Firms: The New Frontline

Equinor's $60 billion, ten-year plan to drill 250 exploration wells and develop 75 subsea fields highlights the sector's pivot toward subsea projects. Similarly, Aker BP and Vår Energi are advancing development initiatives, such as the Yggdrasil and Valhall PWP–Fenris projects, with production start-ups expected in 2027. These projects are underpinned by strong financial resilience: Aker BP's updated investment estimates have risen by NOK 75 billion due to inflation and value-enhancing changes, while Vår Energi reported $1.3 billion in cash flow from operations in Q1 2025.

Subsea service firms are also securing high-impact contracts. Subsea7, for instance, has been awarded a $300–$500 million contract for the PPF redevelopment project, involving engineering and installation of subsea infrastructure. Meanwhile, Odfjell Drilling Ltd. has secured a $373 million contract with Equinor for the Deepsea Aberdeen drillship, extending its engagement with the Fram Sør project. These contracts, coupled with a robust backlog (Odfjell's NOK 12.4 billion in 2025), illustrate the sector's capacity to generate stable revenue despite broader industry headwinds.

Strategic Projects and Investor Opportunities

The PPF redevelopment and Fram Sør projects exemplify the strategic value of subsea and drilling services. The PPF project, a $1.8 billion initiative led by ConocoPhillips and partners, will tie 11 wells and four subsea templates to the Ekofisk Complex, enhancing production longevity. Similarly, the Fram Sør project, a $2 billion venture by Equinor and Var Energi, aims to connect the Echino South and Blasto discoveries to the Troll C platform, with production slated for late 2029. These projects not only extend field lifespans but also align with Norway's goal of maintaining energy security for Europe.

For investors, the key lies in identifying firms with diversified exposure to production drilling and subsea maintenance. Odfjell Drilling's recent contract with Equinor and Subsea7's involvement in PPF position them as strong candidates. Additionally, companies like Vår Energi, which added 180,000 barrels of oil equivalent per day in 2025, demonstrate the potential for growth through operational efficiency and project execution.

Navigating the Sector Slowdown

While the broader oil and gas sector faces a 4% investment decline in 2026, subsea and drilling service firms are insulated by their role in sustaining existing infrastructure. This resilience is further reinforced by Norway's strategic emphasis on production drilling and the government's push for new licensing rounds in frontier areas like the Barents Sea. For investors, the challenge is to balance short-term volatility with long-term value creation, focusing on firms with strong backlogs, diversified project pipelines, and alignment with Norway's energy transition goals.

In conclusion, Norway's 2026 investment priorities signal a pivotal shift toward subsea and production-focused activities. By targeting firms like Equinor, Aker BP, Vår Energi, and subsea service providers such as Subsea7 and Odfjell Drilling, investors can capitalize on the sector's resilience while contributing to Norway's continued role as a critical energy supplier to Europe.