McDermott swings to loss in 4Q

Houston-based provider of EPCI services McDermott has booked a loss as well as lower revenues in the fourth quarter of 2015 compared to the same period of 2014. 

The company realized fourth quarter 2015 net loss of $18.7 million, compared to net income of $8.2 million, in the prior-year fourth quarter.

Further, McDermott reported fourth quarter 2015 revenues of $667.4 million, a decrease of $139 million, compared to revenues of $806.4 million for the prior-year fourth quarter.

McDermott said that the INPEX Ichthys project drove the decrease in revenue as it had comparatively lower activity than the prior-year fourth quarter which included significant marine activities, including the installation of the riser support structure and the reeled pipe lay scope. The key projects contributing to revenue for the fourth quarter of 2015 were INPEX Ichthys, Aramco Safaniya Phase 2, ADMA 4 Gas Injection, Brunei Shell pipeline replacement and PB Litoral.

“Of special note this quarter, all areas were operationally profitable on an adjusted basis,” said David Dickson, President and Chief Executive Officer of McDermott.

“Despite the current macro outlook we hold greater than 80% of expected 2016 revenue in backlog, our bidding activity remains high and we continue to anticipate a good revenue opportunity pipeline.”

As of December 31, 2015, McDermott’s backlog was $4.2 billion. Of this backlog, approximately 69% is related to offshore operations and approximately 31% is related to subsea operations. Order intake in the fourth quarter 2015 totaled $478 million, including the awards of the ONGC Vashishta and the offshore Trinidad installation project.

During the fourth quarter 2015, the company initiated the efficiency driven Additional Overhead Reduction (AOR) program in order to improve its cost structure.

According to the company, AOR actions are expected to be substantially complete in the first quarter of 2016, and include personnel reductions affecting direct operating expense and SG&A. The objective of AOR is to further address fixed costs while maintaining the capability and capacity potential of the company. The company anticipates annualized cash savings of approximately $25 million, and restructuring costs of $5 million in 2016.

McDermott’s restructuring costs for the fourth quarter 2015 were $8.7 million and are expected to be approximately $10 million for the full-year 2016 as a result of remaining MPI actions as well as the AOR program.

Offshore Energy Today Staff

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