World’s largest FPSO supplier SBM Offshore will shut down its Brasa yard in Brazil where it integrates FPSO units’ hulls and modules, taking a $20 million impairment. Apart from this, SBM also took a $25 million impairment on its Floating Production Unit business.
The Dutch company said that despite Brazil being its key market, with a number of opportunities being actively pursued, the lead time for opportunities to mature in terms of construction activities, combined with the uncertainty regarding the evolution of local content regulations has led to the decision to keep Brasa yard shut for at least two years.
The 65,000 m² Brasa yard, established in 2012, is located in Niteroi, Rio de Janeiro, Brazil. It was responsible for the topside integration construction on SBM’s Cidade de Ilhabela, Cidade de Marica, and Cidade de Saquarema FPSO’s.
The company on Thursday said: “SBM Offshore, together with its joint venture partner, has decided to take steps to further mothball the Brasa construction yard for at least the coming two years. This decision will necessitate the impairment of the investment in the Joint Venture owning yard (50% ownership) to a net book value of zero, resulting in an impairment charge of c. US$20 million.
No demand for FPUs
Apart from Brazil, SBM Offshore has taken an impairment charge on its Floating Production Unit business focused on delivery of semi-submersible platforms and Tension Leg Platforms.
SBM said: “Although the company will continue to seek opportunities in the Floating Production Unit (FPU) market, the visibility of client activity in this segment remains subdued. As a result, goodwill related to the acquisition of Houston-based subsidiaries has been impaired in full, resulting in an impairment charge of c. US$25 million.
“The establishment of a global resource pool for engineering, announced in February, has facilitated the deployment of Houston-based resources towards other product lines, including FPSO,” SBM said.
Apart from Brasa and FPU business line, SBM Offshore on Thursday showed optimism when it comes for future FPSO demand, also lifting its underlying 2018 Directional EBITDA guidance updated from “around” to “above” US$750 million.
SBM Offshore CEO Bruno Chabas said: “The market recovery is accelerating on the back of industry fundamentals. Investment is required to secure future production and deep water projects rank favorably in client project portfolios. SBM Offshore is uniquely positioned to benefit from the current upturn.”
Directional revenue guidance for the year is maintained at around US$1.7 billion, with around US$1.3 billion from Lease and Operate and around US$400 million from Turnkey.
Year-to-date, the SBM Offshore generated revenues of US$1,247 million, which is stable (-1%) compared with the same period last year.
Offshore Energy Today Staff