Subsea 7, a subsea engineering, construction and services company, has managed to keep its first quarter 2016 profit in balance with the one made a year ago, but the company expects the outlook to remain challenging.
The company’s net income fell from $151 million in the first quarter of 2015 to $147 million in the first quarter of 2016.
Subsea 7’s revenues dropped to $746 million in the first quarter of 2016, a decrease of 37% when compared to $1.2 billion in the corresponding period in 2015. The company explained that the decrease was due to significantly lower activity levels in both business units driven by the challenging market conditions within the industry.
Total vessel utilisation in the first quarter was 55% compared with 68% in 1Q 2015 due to reduced offshore activity in the North Sea and Africa.
Active vessel utilisation was 71% with one chartered vessel released in the quarter and seven owned vessels stacked at quarter end.
Order intake of $1.1 billion resulted in backlog increasing to $6.5 billion as at March 31, 2016.
Long-term outlook remains positive
Jean Cahuzac, Chief Executive Officer, said: “The outlook remains challenging and the timing of new contract awards is still uncertain as clients continue to postpone capital investment decisions in the current market environment.”
Cahuzac stated that Subsea 7 was working with clients and alliance partners to drive down the costs of development to enable more projects to progress despite the low oil price.
He added: “Full year 2016 revenue is expected to be significantly lower than in 2015 and Adjusted EBITDA percentage margin is expected to be lower compared to 2015. In this context, additional cost reduction measures will be implemented during the year.
“The fundamental long-term outlook for subsea field developments remains positive and industry activity is expected to improve when the oil and gas markets rebalance.”
Offshore Energy Today Staff