Aker Moves Forward with Strong Profit Performance
The Aker industrial group has noted that it is not unaffected by the current turbulence in worldwide credit and stock markets, but that the company continues to progress along a steady course, closely focused on the company's longterm industrial goals.
Over the two past years, the company has built a solid financial foundation. This financial strength provides shareholders with security as to future dividend-paying capacity and prospects for continued value growth via the launch and development of new companies in the Aker family.
In the third quarter of 2008, Aker Solutions -- the largest Aker company -- once again delivered strong profit performance: Aker Solutions reported a record-high 8.5 percent operating margin (EBITDA). Aker Solutions' order backlog is also growing; these factors generate predictability for the company’s activities in the time ahead.
In Ghana, Aker was recently selected as the license operator of an extensive deepwater oil and gas exploration area. Promising geological structures have been identified in the acreage covered by the exploration and production license. Comprehensive survey and exploration work are planned for 2009 and thereafter.
Aker Solutions' operating profit increased in the third quarter of 2008; EBITDA margin in the quarter was a record-high 8.5%. The company’s order backlog was NOK 58.2 billion as of September 30, 2008, up NOK 4.8 billion in the third quarter.
Several projects in the North Sea and international markets are currently in the bidding phase. Aker Solutions is well positioned for major project awards in Arctic regions and on the Norwegian continental shelf; potential projects include Hebron, Goliat, Ekofisk, Kashagan, Sakhalin, and Shtokman. Delivery of the first H-6e rig, Aker Spitsbergen, has been postponed until early 2009.
Delivery of Aker Barents will take place in the second quarter of 2009.
In furtherance of the company’s strategy to grow in high margin and high tech segments, Aker Solutions reorganized its Subsea and Products & Technologies business areas in the third quarter of 2008. The company's delivery model more closely conforms to customers' needs as a result of the reorganization.
The offshore exploration company is financially strong, and project planning for drilling its first four wells is in an advanced phase. Profit for the third quarter of 2008 is characterized by significant unrealized currency gains. The unrealized gains are attributable to currency hedging contracts.
Aker Exploration is fully financed to carry out a comprehensive drilling program on the Norwegian continental shelf over the next three years. In the third quarter of 2008, the company was strengthened by acquiring a stake in two additional licenses. Aker Exploration currently has ownership interests in 17 licenses. Drilling start-up for the company's semisubmersible rig, Aker Barents, is scheduled for the second quarter of 2009.
Aker Exploration has applied for license awards in Norway's upcoming 2008 Awards in Predefined Areas (APA) round. The company has also applied for blocks in the 20th Norwegian continental shelf licensing round. Awards granted in the two rounds are expected to be announced in the first half of 2009.
Aker Floating Production
The production company reached its greatest milestone to date when the Dhirubhai-1 FPSO (floating production, storage, and offloading) vessel commenced oil production at India's MA field in the Bay of Bengal. The FPSO is moored in waters 1,200 meters deep. Oil production from the field began in record time, a mere 16 months after Aker Floating Production was contracted by Reliance Industries, Ltd. of India to convert a Suezmax tanker into an FPSO for deployment at the MA field.
Dhirubhai-1, which has a production capacity of 60,000 barrels of oil a day, has been chartered under a 10-year contract.
Aker Floating Production is continuing to strengthen its organization. The company owns an additional two tankers suitable for conversion into Aker Smart FPSOs. No decision has been made regarding further FPSO conversions.
Aker Drilling has been informed of new delivery dates for its Aker H-6e rigs. Delivery of the first rig, Aker Spitsbergen, will take place in early 2009. The second rig, Aker Barents, is scheduled for delivery in the second quarter of the year. It is of great importance to Aker Drilling that completion adhere to the revised schedules. The company has entered into an agreement with Aker Solutions on additional financial incentives to ensure delivery according to the revised schedules.
Equipment and system testing, crew recruitment and training, and other preparations for drilling operations are proceeding at a fast pace. As of September 30, 274 employees had been hired. The company continues to enjoy great interest among qualified professionals and staff recruitment is on schedule. An application for an
Acknowledgement of Conformity (AoC) for Aker Spitsbergen has been submitted to the Petroleum Safety Authority Norway; on-site audits and verification are as planned.
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