The boss of Subsea 7 has said the fundamental long-term outlook for deepwater subsea field developments remains intact despite the company reporting $702million lower revenue in the third quarter of 2015 compared to the same period 12 months ago.
Chief executive Jean Cahuzac, annoucing the Swiss-registered company’s third quarter results, said its revenue for the three month period to September was $1.2billion, down $702million from the prior year.
Cahuzac said that, based on the prevailing market trends, both revenue and margins in 2016 are expected to be significantly lower than its forecasts for 2015 with the outlook beyond 2016 uncertain.
He added: “Cahuzac said: “The fundamental long-term outlook for deepwater subsea field developments remains intact despite the challenges facing the industry as a result of the lower oil price.
“Subsea 7 has delivered another quarter of good results in the three months to 30 September, despite the continuation of difficult industry conditions and resultant decline in market activity.
“The sustained low oil price environment continues to result in lower oil company expenditure and subdued industry activity. The timing of contract awards to market remains uncertain.”
The cost reduction and resizing programme announced in May 2015 is on track to deliver approximately $550 million of annualised cost savings.
Cahuzac said: “The headcount and active fleet reduction has progressed as planned. Of the 12 vessels to leave the active fleet by early 2016, six owned vessels have been stacked and one chartered vessel has been returned during the third quarter.”
Adjusted EBITDA of $351 million included a $36 million charge related to the cost reduction and resizing programme.
Global vessel utilisation was 74% in the quarter reflecting a reduction in life of field work in the Northern Hemisphere and reduced activity levels as some projects completed their offshore phases.
Offshore UK, the Montrose and Catcher projects made significant progress and concluded offshore activities for 2015, and Statoil’s Mariner project also progressed with high levels of offshore activity in the quarter, the company reported.
The Aasta Hansteen project, offshore Norway, progressed its offshore installation phase with all major fabrication completed.
In Brazil, there were high levels of vessel activity under the long-term PLSV contracts with Petrobras throughout the quarter.
Towards the end of the quarter the new-build pipelay support vessel (PLSV) Seven Rio joined the fleet and commenced work in the Gulf of Mexico: this vessel will subsequently transit to Brazil to commence a five-year contract for Petrobras.
The company also wrote down $36 million on the Seven Polaris, which will be scrapped.
Last month, Subsea 7 confirmed it to downsize its Aberdeenshire office as it looks to streamline costs during the oil price decline.