Building strongly, despite the on-off Middle East situation

Research evidence excerpt

Building strongly, despite the on-off Middle East situation

Equity Research

13 July 2026

European Energy Services

Building strongly, despite the on-

off Middle East situation

2Q will see concerns over the ongoing Middle East situation, European Energy Services

but the cycle appears to be gathering momentum, with POSITIVE Unchanged

orderbooks seeing notable growth. European Energy Services

Mick Pickup

2Q results will see more of the dual focus that 1Q brought. The outlook for the sector +44 (0)20 3134 6695

mick.pickup@barclays.comcontinues to improve, with energy security and diversity of supply becoming a core

Barclays, UK

cornerstone of energy policies worldwide, but the on-off nature of the Middle East conflict

will have an impact. That said, we have seen major new incoming orders, including from Pratik Kadam

the Middle East region, with over US$23bn of awards identified, the largest inbound that +91 (0)22 6175 2301

pratik.kadam@barclays.comwe have tracked. Our bidding pipeline indicator has also inflected, jumping by 11% over

the quarter. Hence, we expect to see a positive results season, supporting the longer-term

thesis for the sector activity levels. This has partly been recognised in share prices, with

the sector (EMEAOGP) outperforming the wider energy sector (SXEP) by 15% over the

quarter. However, the sector is trading on c.12x 2027F PE vs. a 16x average for the 2018-25

period and we see a median upside potential of c.35% to our PE-derived price targets. Our

preferred names remain Tecnicas Reunidas, where we think a Middle East resolution could

focus investors on the expanded backlog, margin potential and US power opportunity, and

TGS, where we feel that a frontier exploration rebound should lead to further debt