Subsea 7 Sees More Opportunities after Strong 4Q Results
by Jon Mainwaring
Friday, March 16, 2012
UK-based Subsea 7 continues to see growth opportunities in all of its major markets, in spite of general economic and political uncertainties, the oilfield engineering services firm said Friday.
Reporting strong results for the fourth quarter of 2011, Subsea 7 said that it expects 2012 to be a "year of progress for Subsea 7", with growth expected in both its revenue and profit (at the adjusted EBITDA level).
For 4Q 2011, Subsea 7 reported revenue $1.4 billion – almost double the $717 million that the firm generated in 4Q 2010. Adjusted EBITDA for the three months to Dec. 31 2011 was also greater at $227 million (4Q 2010: $179 million).
The firm said the good performance in 4Q 2011 could be attributed to strong activity levels, particularly in the North and Norwegian Seas, as well as West Africa. It also benefited from good activity levels in Brazil.
For the whole of its 2011 financial year Subsea 7's revenue amounted to $5.5 billion compared with $5.3 billion for 2010, although the most recent financial year included 13 months due to a change of year-end date. Adjusted EBITDA for 2011 was just ahead of the previous year at $1 billion (2010: $979 million).
In 2012, Subsea 7 said that it expects to see increased activity in the North Sea with improved margins year-on-year for those projects which are offshore. Levels of tendering within the region remain very strong, it added.
In West Africa, the firm expects 2012 to be a year of transition with lower offshore activity on those projects awarded over the past 18 months. It expects a number of major SURF (subsea, umbilical, risers and flowlines) contracts during the year, with offshore execution in 2013 and beyond.
Subsea 7 expects its activity in Brazil to remain strong in the traditional deepwater basins. The firm said that its new-build PLSV (Pipe-Laying Support Vessel) is progressing according to plan, with operations expected to begin in 2014.
However, Subsea 7 also said that in 4Q 2011 it recognized a project-life loss of approximately $50 million on the Guara Lula Project. The project's result has been affected by several factors, including the negative impact of Subsea 7's revised spool-base plans and delays related to key suppliers' Brazilian production.
In the Gulf of Mexico, Subsea 7 sees an increase of activity with contract awards in 2012 and execution planned for late 2013 and 2014 in what it describes as a "still competitive market".
Meanwhile, in Asia Pacific Subsea 7 expects further gas-driven SURF contracts offshore Australia.
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