Flow Control/SMID

Critical energy aftermarket and upgrades that are necessary to maintain operations are continuing to some extent but the scope of work has been reduced/limited. Operators are performing the bare minimum and opting not to do the general maintenance that would otherwise have been completed in a normal season. It is also possible we could see some catch up on deferred and pent-up activity next year but we think it will continue to be a slow grind across energy-related markets for some period. Near-term, global lockdowns/restrictions could impact access. Pressure on both capex and opex across the energy landscape clouds the view from here. While the mega-stimulus plan hoped for by some is unlikely under a divided government, the likelihood of a smaller stimulus package particularly given the growing health concerns in the U.S. is highly likely. We could also see policy moves through regulatory actions. Biden is already assembling his transition team including members who favor stronger government regulation than Trump, particularly in the energy sector. In short, investor exuberance on vaccine news suggests the market is looking through any near-term disruptions related to the virus and lockdowns, which does inject some vulnerability to any setbacks.

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Brett Linzey
Vice President

Denys Klimyentyev
Analyst

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