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Delays, Bottlenecks to Temper Subsea 7's Progress in 2013

19 November 2012

Oilfield services firm Subsea 7 expects positive momentum in 2013 to be tempered by delays in projects awards during this year as well as supply chain bottlenecks affecting the industry, it said Monday.

Reporting its 2012 third quarter results, Subsea 7 said that its expects West Africa to move through a period of lower offshore activity in 2013 as delays to SURF (subsea umbilical, riser and flowline) contract awards mean execution of these projects will begin in 2014 and beyond.

Subsea 7 said that in the North and Norwegian seas levels of tendering remain strong with improved pricing, but that it was too still too early to be definitive about 2013. The firm added that a number of factors may temper the rate of progress here, including some of its backlog being awarded late in 2012 which will mean associated offshore activity will largely occur in 2014.

In Brazil, Subsea 7 reported that it expects demand from Petrobras for pipelay vessels will remain strong, and that it was negotiating the renewal of four vessel contracts due to be completed in late 2013.

In Asia Pacific, the firm said that tendering levels are slowly improving and that it expected projects to be awarded during 2013.

Meanwhile, in the Gulf of Mexico, Subsea 7 sees an increased number of prospects as its clients' activity slowly picks up.

In terms of the firm's third quarter, it reported 3Q revenue up around 21.8 percent at $1.7 billion, with 3Q net income coming in at $194 million (3Q 2011: $173 million).

"We have delivered a good quarter in line with our expectations. These results reflect high offshore activity in West Africa, and high vessel utilization in the North Sea. We are on track to deliver full year Adjusted EBITDA in line with consensus expectations," Subsea 7 CEO Jean Cahuzac commented in a company statement.