Lower profit and revenues for Subsea 7 in 2Q

UK subsea engineering and construction services company Subsea 7 saw a decrease in both profit and revenues during the second quarter 2019 affected by lower activity in its Renewables and Heavy Lifting business unit. 

Seven Arctic vessel. Source: Subsea 7

Subsea 7 said on Thursday that its revenue dropped 17% to $958 million in the second quarter 2019 from $1.16 billion in the prior-year period.

This reduction was driven by lower activity levels in the Renewables and Heavy Lifting business unit, primarily due to the completion of the Beatrice wind farm project. Revenue in the SURF and Conventional business units was in line with 2Q 2018 and there was an increase in activity within the Life of Field business unit.

The company’s net income decreased to $24 million from $74 million in the second quarter of 2018.

This was primarily due to the decrease in net operating income; and net foreign currency losses of $6 million in 2Q 2019, compared to net foreign currency gains of $25 million in 2Q 2018.

The company’s order backlog at the end of June was $4.6 billion with $395 million of new awards and escalations in the quarter.

Vessel utilization was 75%, unchanged from the prior year period with lower levels of utilization for Renewables and SURF projects offset by higher utilization for the PLSVs and Life of Field services. At June 30, 2019, Subsea 7 had 34 vessels in its fleet, including one vessel under construction and two stacked vessels.

The new-build reel-lay vessel, Seven Vega, was launched in May, a significant construction milestone, and is now undergoing outfitting and testing ahead of scheduled delivery in early 2020.

Subsea 7’s new awards and escalations totaled $395 million in the second quarter, including the Johan Sverdrup Phase Two project, offshore Norway, announced in June.

According to the company, the pace of offshore oil and gas awards to market is gradually increasing supported by higher tendering and early engagement activity. Larger greenfield awards often include engineering studies and integrated solutions, and so take longer to progress from tender to project sanction and award.

Jean Cahuzac, Chief Executive Officer, said: “The recovery in offshore oil and gas continues to make steady progress as lower cost solutions for offshore developments service the growing global demand for energy.”

He also added: “We are positive on the outlook for our markets.”

The pace of SURF awards to market so far this year has been steady and Subsea 7 has announced four new project awards year to date. The company stated that the pace of awards is expected to increase over the next 12 months as clients progress their investment decisions on the first phase of greenfield projects to be sanctioned since the downturn.

The increase in market activity and subsequent tightening in key vessel availability in the medium-term is supporting improved pricing compared to the prior year. Demand for IRM services is steady, and market award activity for Conventional projects in the Middle East is strong.

Offshore Energy Today Staff

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