Subsea unit causes slight drop for Subsea 7 figures
Subsea 7 has reported a revenue of $1.4 billion for the third quarter of 2022, a decrease of $47 million or 3% compared to Q3 2021, mainly due to a drop in revenue in the Subsea and Conventional business unit.
Revenue for the third quarter of the Subsea and Conventional unit was $990 million, a decrease of $64 million or 6% compared to the prior year period.
In the Renewables unit, revenue was $374 million, a slight increase compared to $377 million in Q3 2021.
For Q3 2022, Subsea 7 reported an adjusted EBITDA of $171 million, resulting in an adjusted EBITDA margin of 12%, a decrease of $14 million or 8% compared to Q3 2021, again mainly driven by lower results in the Subsea and Conventional business unit, with the prior year period results benefitting from client settlements.
Net operating income was $53 million compared to $78 million in Q3 2021, which benefitted from a credit of $8 million related to the company’s resizing program as a result of downward revisions to restructuring cost estimates.
Active vessel utilization for the third quarter was 85% compared with 94% for Q3 2021, while total vessel utilization was 80% compared to 88% in the same period the year before.
Subsea 7 reported a backlog of $7.1 billion, of which $1.3 billion is to be executed in Q4 2022 and $3.2 billion in 2023.
“During the quarter an agreement to form a new joint venture was announced, involving the combination by SLB and Aker Solutions of their subsea hardware operations, and the acquisition by Subsea7 of a 10% interest in the new company for $306.5 million,” said John Evans, Subsea 7’s CEO.
“The joint venture will replace SLB in Subsea Integration Alliance and our investment will strengthen the relationship with our partners. In addition, we expect an attractive return on investment on a standalone basis. The Subsea Integration Alliance agreement will be extended to 2033 on completion of the transaction.”
Subsea 7 is expecting that revenue and adjusted EBITDA in 2022 will be broadly in line with 2021 and in 2023 to be higher than this year, with a weighting towards the second half.
Furthermore, the company said that bidding activity remains high, with a tender pipeline of around $16 billion in subsea, up 20% on the prior year, and $7 billion in fixed offshore wind.
“After a prolonged period of underinvestment by the oil and gas industry, we see a gradual and durable improvement in demand for our subsea services. At the same time we expect limited new-build vessel capacity to enter our pipelay market. Demand for our fixed offshore wind services continues to increase underpinned by society’s push for lower carbon energy sources,” Subsea 7 said.
In terms of projects in Q3 2022, the Subsea and Conventional business unit made “good progress” in engineering and procurement activities on the Mero 3 and Marjan 2 projects in Brazil and Saudi Arabia respectively.
In the Renewables business unit, the fleet achieved high utilization including the completion of monopile installation activities on the Hollandse Kust Zuid (HKZ) offshore wind project in the Netherlands and Formosa 2 in Taiwan, and cable lay vessels were fully utilized on Seagreen in the UK, as well as on HKZ.