SBM Offshore’s Yme and Deep Panuke platforms have now been installed on their respective offshore locations in Norway and Canada. Commissioning activities, as well as remaining construction works are currently ongoing to complete and prepare the facilities for start of production.
Due to one client recently having revised its contractual position and a remeasurement of remaining on-site works the latest forecast net costs for the two platforms has materially increased.
In both projects the Company has been unable to reach a settlement with its clients for additional compensation. Legal action in the case of the Deep Panuke platform and arbitration proceedings for the Yme platform have been initiated against the respective clients. The Company will actively continue both actions to maximise recovery of costs. The outcomes of proceedings will only be known when the litigation and arbitration processes have run their course.
Due to the uncertainty as to the Company’s ability to secure satisfactory compensation for its claims, the Company will therefore book an impairment charge under the Lease and Operate segment in the SBM Offshore H1 2011 results to be published on 18 August 2011.
Deep Panuke Platform
The impairment charge to be recognised amounts to US$ 450 million which will lead to a net loss for the first half year of 2011. Net result before minority interests for the full year 2011 is expected to be close to breakeven. A fully updated 2011 outlook will be issued with the mid-year results release.
The more recent major projects in execution by the Company are on schedule and are performing in line with or above expectations.
In view of the ongoing legal action, arbitration proceedings, discussions with our clients and finalisation of the mid-year accounts the Company can not disclose any further information regarding the above impairment charge nor outlook until mid year results press release and analysts presentation on 18 August 2011.
Source: SBM Offshore, July 28, 2011;