Subsea 7 looking at range of options - could release 10 vessels back into the marketNews // March 6, 2015
Subsea 7 has announced results for the fourth quarter and the full year which ended on 31 December 2014, and is looking at a range of options as it adjusts to the steep fall in the price of oil.
Jean Cahuzac, Chief Executive Officer, said: "Our strong overall performance in 2014 was achieved against a backdrop of a progressive deterioration in business conditions and the environment for our industry continues to be challenging. We achieved strong underlying financial results in 2014 with record revenue and adjusted EBITDA driven by high levels of project activity across all four territories and vessel utilisation of 82 per cent.
"Our operational performance reflected, overall, good project execution delivered by our experienced teams both onshore and offshore."
Revenue for the full year 2014 was US$6.9 billion, 9 per cent higher than in 2013. Adjusted EBITDA of US$1,439 million reflected positive contributions from all four territories and included a US$100 million reduction in the full-life project loss on the
Guará-Lula NE project in Brazil.
The group's reported net loss for the year of US$381 million included a non-recurring, non-cash charge of US$1,183 million related to an impairment of goodwill recognised in the fourth quarter following a downward revision of forecast activity levels, driven by challenging market conditions. Excluding the goodwill impairment charge, net income was US$802 million.
Subsea 7 said it is "positioned competitively" for new market awards and reported 2014 order intake of US$3.3 billion.
The company said the level of tendering activity for new SURF awards remains "subdued" as oil companies continue to delay final investment decisions and although there are potential projects expected to be awarded to the market in 2015, the timing remains highly uncertain.
"Notwithstanding this, we are competitively positioned to win new awards and we have a solid backlog for execution in 2015, a robust PLSV business in Brazil and long-term Life of Field projects that extend into 2016 and beyond," said Mr Cahuzac. "This backlog underpins our revenue in 2015, which is expected to be significantly lower than the record revenue reported in 2014.
"We took steps in early 2014 to prepare the group for the downturn, implementing cost reduction programmes and other efficiency improvements. This focus will continue in 2015 as we further reduce the size of our cost base to align the business more closely with market conditions. Nevertheless we expect adjusted EBITDA margin to decrease in 2015 as a consequence of lower activity levels and pricing pressure.
In a presentation released to coincide with the results, Subsea 7 said it was continuing to adjust organisation size to market trends and noted that its headcount had reduced to 13,000 from over 14,000. Further adaption to suit the lower oil price environment could includes a potential fleet reduction by 10 vessels, over a two year period, through release of charter vessels and disposal of owned vessels.