Active fleet steers Subsea 7 quarterly figures forward
Subsea 7 has reported a revenue of $1.45 billion for the third quarter of 2021, up 53% year-on-year, said to be driven by the very high utilization of the active fleet.
Overall, utilization of Subsea 7’s active fleet of 28 vessels was 94% in the third quarter, compared to 84% in the same period the year before, including 92% utilization of the Subsea and Conventional fleet and 99% utilization of the Renewables vessels.
In Q3 2021, Subsea 7 saw an adjusted EBITDA of $185 million, up from $114 million in the prior-year quarter, an improvement said to reflect an increased level of engineering and procurement on major projects, combined with high vessel utilization and some client settlements.
The company booked new orders of approximately $1.3 billion and escalations of approximately $100 million. The backlog at the end of September was $6.7 billion.
Following the completion of the combination with OHT ASA to create Seaway 7 ASA on 1 October, the backlog was $6.9 billion of which $1.4 billion is expected to be executed during the remainder of 2021, $3.5 billion in 2022, and $1.8 billion in 2023 and thereafter.
“Subsea 7 delivered a strong operational and financial performance in the third quarter driven by very high utilisation of the active fleet in both Subsea and Conventional and Renewables, as well as an increased level of engineering and procurement activity relating to recent major awards,” said John Evans, Subsea 7 CEO.
“Revenue increased 53% year-on-year due to a significant increase in activity in the Subsea and Conventional and Renewables business units in the UK, Norway, Gulf of Mexico, Brazil and Turkey. After deducting net direct costs related to the Covid-19 pandemic of $9 million, with the benefit of an increased contribution from client settlements, the Adjusted EBITDA margin of 12.8% was up from 12.0% in the prior-year quarter.”
According to Subsea 7, its tendering and early engagement teams are active and the company has seen an increase in headcount over the past year to meet demand from clients in key areas.
While activity on early-stage projects has increased significantly, the company said it continues to plan a temporary reduction in the active Subsea and Conventional fleet for 2022 before a recovery in offshore activity in 2023.
In Renewables, tendering is active for projects expected to be awarded to the industry in 2022, including in Asia, Europe, and the U.S.
The UK company expects that revenue and Adjusted EBITDA in 2021 will exceed the prior-year levels, and that net operating income will be positive. In 2022, Adjusted EBITDA is anticipated to be broadly in line with 2021 before returning to growth in 2023.
To remind, a month ago, Subsea 7 revealed it had set up a target to achieve net-zero greenhouse gas (GHG) emissions by 2050. In addition, using 2018 as a baseline year, the target is to reduce Scope 1 and Scope 2 emissions by 50% by 2035.