Subsea 7 cuts quarterly loss

Subsea services contractor Subsea 7 narrowed its net loss for the fourth quarter 2016 and returned to profit for the full year 2016. 

Subsea 7 on Thursday reported a $13 million net loss for the last quarter of 2016, a significant reduction compared to a $421 million loss in the prior-year quarter.

According to the company, the decrease in net loss was primarily due to a decrease of $371 million in net operating loss, driven by the reduction in the goodwill impairment charge; and a taxation benefit of $13 million in the quarter compared to a charge of $17 million in 4Q 2015.

This was partially offset by net foreign currency gains of $16 million in 4Q 2016, recognized within other gains and losses, compared to $12 million gains in 4Q 2015.

For the full year 2016, the subsea company returned to profit that totaled $418 million versus $37 million net loss in 2015.

During the fourth quarter 2016, the company’s revenues dropped by 9% to $932 million from $1.025 billion in the corresponding period of 2015. The reduction in revenue reflected lower activity levels within the SURF and Conventional and i-Tech Services Business Units, partially offset by increased activity within Renewables and Heavy Lifting reported within the Corporate reporting segment.

Jean Cahuzac, Chief Executive Officer, said: “We delivered good operational and financial performance in 2016, despite the continued industry-wide downturn in activity. This performance reflected successful implementation of our cost reduction measures, while maintaining high standards of execution and preserving the Group’s expertise and capability.”

Workforce reduced by 40 pct since 2014

Since the start of 2014, Subsea 7’s workforce has been reduced by over 40 percent, six chartered vessels have been returned to their owners, four owned vessels have been stacked and two owned vessels have permanently left the fleet. By early 2017, resizing measures will have been completed resulting in a workforce of approximately 8,000 people and a fleet of 33 vessels.

Subsea 7 achieved $3.4 billion order intake during 2016 and ended the year with a backlog of $5.7 billion, compared to $6.1 billion in 2015.

Out of that total amount, $4.1 billion is related to the SURF and Conventional Business Unit, $0.5 billion related to the i-Tech Services Business Unit, and $1.1 billion related to the Corporate Business Unit, which includes Renewables and Heavy Lifting.

Total vessel utilization was 65% in the fourth quarter 2016, an increase compared to the same period of 2015 and utilization of 62%.

Subsea 7 guidance for the full year 2017 is unchanged. Revenue is expected to be broadly in line with 2016, supported by current backlog.

‘Gradual recovery’ 

The company noted it has responded to the oil and gas market downturn with cost reductions, technological innovation, industry alliances and client partnerships to deliver more efficient solutions for its clients and position itself for long-term success.

Looking ahead, Subsea 7 said: “We expect a gradual recovery of oil and gas field development activity. The oil and gas market has achieved a degree of stability in recent months and there are indications that project sanctions will increase. Assuming the oil price improvement is sustained and the cost reductions identified by the industry are consistently achieved, there is cause to believe that the number of SURF project awards to the market could increase within the next 12 months.”

Offshore Energy Today Staff