Red ink for Sevan Marine. Millions spent on bribery investigation

Sevan Marine, a company specializing in floating production and drilling units, has posted a net loss for the third quarter of 2015 compared to profitable third quarter of 2014. 

Namely, Sevan Marine’s net loss for the third quarter of 2015 was $10 million compared to profit of $1.3 million in the corresponding period last year. However, the company narrowed its 3Q 2015 loss when compared to $39.1 million loss in the 2Q 2015.

The company also posted lower operating revenue for the third quarter 2015 that amounted to $21.8 million, as opposed to $25.2 million in the same period last year.

EBITDA was negative $1.9 million for 3Q 2015, as opposed to positive $1.5 million in 3Q 2014.

Furthermore, the company’s operating loss was $8 million, versus operating profit of $1.4 million same time last year.

According to Sevan Marine, an unrealized foreign exchange loss of $1.3 million related to NOK denominated cash positions negatively impacted the net result. A $6 million non-cash, write down of goodwill related to Sevan Marine’s investment in KANFA AS negatively impacted net profit further, the company explained.

 

Bribery case

Sevan Marine reminded that the Board had received in October 2015 the external investigation report regarding allegations of possible improper conduct related to historical contracts with Petrobras in Brazil from Advokatfirmaet Selmer DA (Selmer). Sevan Marine decided to hand the report over to the Norwegian authority for investigation and prosecution of economic and environmental crime (ØKOKRIM).

While the investigation by Selmer is now completed, Sevan Marine says it expects to continue its dialogue with authorities in 2016.

The expected total cost of the investigation remains in the range of $2 to $4 million. As of September 30, 2015, $1.4 million of cost has been incurred.

 

20 percent laid off

In the report, Sevan said that the cost cutting program launched in 1Q 2015 was having a positive impact on the cost level in 3Q 2015 of approximately $0.8 million. Namely, headcount has been reduced by 21 or over 20 per cent and a number of other measures, including moving offices, have been undertaken. The company noted that further cost reduction measures would be implemented.

 

Outlook

Due to lower oil prices and reduced activity, the drilling market is expected to be challenging for the next years, Sevan Marine said in its quarterly report.

The company says that the outlook for the Floating Production segment is dependent upon the outcome of field investment decisions and vendor selection for key FPSO / FSO prospects.

Furthermore, the outlook for the Topside and Process Technology segment is dependent upon the progress of the Yinson OTCP project within KANFA AS and the ability for both KANFA AS and KANFA Aragon to continue securing new work. Further cost reduction measures are being taken, the company noted.

The company also stated: “Sevan Marine believes with its solid cash position and cost reduction plans that it has the resources and ability to successfully weather the current slowdown in activity.”

Offshore Energy Today Staff

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