Aker achieves record orders at its Subsea business and sees a positive short-term outlook for the oilfield services sector.
Aker Solutions saw record orders at its Subsea business during 2013 in a strong year for the group, the firm reported Friday.
In a statement accompanying the firm's annual results for 2013, Aker CEO Øyvind Eriksen said that the firm "continues to see good levels of activity in its niche markets, bar maintenance and modification on the Norwegian Continental Shelf". Eriksen highlighted that Aker's Subsea business received $4.4 billion (NOK26 billion) of orders during the year, while capacity utilization at its Umbilicals factories is high and the Johan Sverdrup framework contract "is likely to keep the Engineering unit in activity for the next decade".
Eriksen noted that the sector was marred by a series of profit warnings in 2013 that he said raised important questions about execution risk. He also noted that capital constraints are cutting exploration and production spending growth to a low single-digit pace.
However, Eriksen said that Aker is taking "a contrarian view" on the strength of the oil services sector, partly due to the firm seeing the good niche activity but also because the projects the firm is currently tendering for remain profitable, despite weaker market fundamentals.
"The company’s products, systems and services offerings primarily target conventional offshore oil and gas developments that remain competitive at levels well below today’s crude oil prices," he said.
Meanwhile, Eriksen pointed out the importance of national oil companies in the oilfield services market.
"Some of Aker Solutions’ key customers are national oil companies (NOC) that are forecast to grow their capital expenditures by 15 percent in 2014, according to SEB Enskilda estimates. I travel frequently on behalf of Aker Solutions and in my meetings with heads of NOCs around the world, I’m told of investment plans with long-term horizons, driven by national economic concerns rather than short-term market fundamentals," he said.
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