Aker Solutions, the Norwegian energy solutions provider, has long been a stalwart in the oil and gas sector. But whispers from their recent Q1 2024 earnings call suggest a potential seismic shift in their strategy. Could this behemoth be quietly positioning itself as a leader in the renewable energy revolution?

While headlines trumpet Aker's continued dominance in oil and gas, a deeper dive into their financials and CEO Kjetel Digre's own words reveals a tantalizing possibility. Aker Solutions might just be the dark horse in the race to decarbonize the world's energy systems.

On the surface, Aker Solutions is still deeply entrenched in the traditional energy sector. Over 50% of their current NOK 69 billion backlog stems from projects with Aker BP, their sister company and a major player in Norwegian oil and gas exploration. These projects, executed under a shared incentive "Alliance" model, are undoubtedly lucrative and contribute significantly to Aker's robust financial health.

However, CEO Digre emphasized Aker's "selective" approach to new projects, hinting at a shift away from purely oil and gas focused ventures. This selectivity is reflected in their tender pipeline, which, despite a recent dip to NOK 58 billion, still dwarfs their annual revenue. Importantly, Digre highlighted a "good mix between traditional oil and gas developments, decarbonization projects, and renewables opportunities" within this pipeline.

Renewables and Field Development: A Segment on the Rise

The intriguing bit? Aker's "Renewables and Field Development" segment is projected to see a staggering 50% revenue increase in 2024. This growth is attributed to expanding scope on existing projects and a surge in demand for their energy consultancy services.

This energy consultancy arm is arguably the most telling indicator of Aker's aspirations. It acts as their spearhead into emerging energy markets, with revenue skyrocketing almost 50% in 2023. During the call, Digre proudly stated that this year, they are already working on over 170 projects, compared to around 300 for the whole of 2023 and a mere 150 in 2022.

What are these projects? Digre pointed to a diverse portfolio, encompassing hydrogen, carbon capture and storage (CCS), offshore wind, and integrated energy systems. They are actively involved in feasibility studies, technology development, and FEED contracts across these sectors, demonstrating a commitment beyond simply dipping a toe in the renewable waters.

One particularly compelling example is Aker's involvement in the Mongstad industrial transformation project for Equinor. This feasibility study aims to slash CO2 emissions from the refinery, exploring the potential for hydrogen and sustainable fuel production. This project showcases Aker's holistic approach, blending their greenfield, brownfield, technology, and integration expertise.

Estimating Aker's Renewables Revenue

Here's where it gets really interesting. While Aker remains tight-lipped on specific numbers, the 50% revenue surge in their "Renewables and Field Development" segment coupled with the exponential growth of their consultancy business strongly suggests that the "renewables" component is becoming increasingly substantial.

Let's hypothesize. If we conservatively assume that renewables currently contribute 20% to the "Renewables and Field Development" segment's revenue, a 50% increase translates to an additional NOK 4 billion in 2024. This would place Aker's renewables revenue for this year at a minimum of NOK 12 billion.

Considering their existing CCS and offshore wind projects, involvement in early-stage hydrogen ventures, and the rapidly expanding consultancy work within renewables, it's plausible that this estimate is actually quite low.

Visualizing the Shift: Project Count by Year

The following chart, derived from CEO Digre's statements, highlights the explosive growth in Aker Solutions' energy consultancy projects, with a clear emphasis on renewable and decarbonization solutions.

A Green Coat for the Giant?

The takeaway? Aker Solutions is not just paying lip service to the energy transition; they are actively building a robust and diverse portfolio in renewable and decarbonization technologies. While their oil and gas legacy remains a significant part of their business, the current trajectory suggests a future where green energy plays an increasingly prominent role.

Key Takeaways and Financials

Investors, take note. The sleeping giant is waking up, and it might just be wearing a green coat.

"Fun Fact: The Mongstad refinery, where Aker Solutions is conducting a feasibility study for Equinor, is the largest oil refinery in Norway. It processes around 12 million tonnes of crude oil per year. This project has the potential to make a significant impact on Norway's efforts to reduce its carbon footprint."