UK engineering and construction services company Subsea 7 recorded an increase in revenues and returned to profit in the fourth quarter of 2017 compared to a loss in the same period of 2016.
The company on Thursday posted a profit of $51 million for 4Q 2017, including a taxation credit of $32 million as a result of a lower full year tax rate, and a $17 million re-measurement loss on business combinations mostly relating to the group’s acquisition of the remaining 50% third party interest of the Normand Oceanic joint venture, compared to a loss of $13 million in 4Q 2016.
Subsea 7 recorded revenues of $1 billion in the fourth quarter of 2017 compared to $932 million in the prior-year quarter.
The company’s backlog at the end of 2017 was $5.2 billion compared to $5.7 billion at the end of 2016.
Total vessel utilization was 55% in the fourth quarter 2017, a decrease compared to utilization of 65% in 2016.
According to the company, the oil and gas cycle is gradually recovering from the very low levels of activity experienced in the last three years and offshore SURF and integrated awards to market are increasing, but pricing remains challenging.
Projects are being awarded at lower values reflecting the cost savings that have been achieved through innovation, best practice processes and supply chain deflation as well as lower, and occasionally negative, margins while making positive cash contributions.
Life of Field activity remains subdued at present but is expected to improve in 2018, Subsea 7 said. There is a steady flow of projects being awarded in the conventional oil and gas markets in the Middle East and the offshore renewables market remains on a moderate growth trajectory.
Subsea 7 guidance for the full year 2018 remains unchanged. Revenue is expected to be broadly in line with 2017 and Adjusted EBITDA percentage margin is expected to be significantly lower than that achieved in 2017.
Also on Thursday, Subsea 7 announced an agreement to acquire Siem Offshore Contractors and two vessels. The acquisition will include the entire issued share capital of Siem Offshore Contractors, the inter-array cable lay vessel Siem Aimery and the support vessel Siem Moxie.
Offshore Energy Today Staff