SBM Offshore: Industry witnessing recovery

Dutch FPSO specialist SBM Offshore has raised the expected revenue forecast for the full year 2017 on the back of the gradual recovery seen in the oil and gas industry.

“As expected, the industry is witnessing a gradual recovery. Although significant decreases in project break-even prices are making deep water more competitive, our clients remain cash constrained and selective in making investment decisions,” SBM said.

However, medium to long term, SBM Offshore said it believed that deep water offshore would regain a solid position in the future energy supply.

The company, which says its FPSOs are producing 10 percent of global deep water production, has reiterated its full year 2017 Directional revenue guidance of around $1.7 billion, with around U$1.5 billion from Lease and Operate and around $200 million from Turnkey segments of the business.

Full-year 2017 Directional Underlying EBITDA guidance is updated from “around $750 million” to “above $750 million”.

This does not include the non-recurring positive effect from the agreed Heads of Terms relating to SBM Offshore’s Yme insurance case, nor does it include any effects from the completion of the Turritella transaction planned for early 2018, SBM Offshore said.

In support of the case that the industry is waking up, the company was recently awarded the FPSO Liza contract by ExxonMobil, “the industry’s only major FPSO contract award of the past 18 months.”

“Break-even prices of deep water projects have substantially improved as result of cost deflation, more fit-for-purpose scope and leaner concept designs. In particular, deep water projects in areas with world class reservoirs have gained competitiveness against other oil and gas investment options. SBM Offshore is well positioned to benefit from this development. Whilst final investment decisions are on the increase, clients remain cautious and selective. As a result, the offshore services industry is gradually recovering but with a structurally lower activity level when compared to the market over the past decade,” SBM Offshore said.

1H result

For the first half of 2017 directional revenue decreased by 11% to $835 million compared to  $939 million in the year ago period reflecting the finalization of major turnkey projects in 2016 and lack of significant order intake over the prior periods. This was not fully offset by increased revenue from the start-up of the completed vessels in the lease and operate segment, the company said.

Directional Earnings Before Interest, Taxes Depreciation and Amortization (EBITDA) for the first half year of 2017 was  $431 million, an increase of 32% compared to the EBITDA of $327 million in the year-ago period.

Offshore Energy Today Staff

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