Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Bright outlook as markets grow

Mike Beveridge
Mike Beveridge

The market outlook for subsea continues to strengthen and build momentum.

There is a large inventory of projects undergoing development, exploration success in many parts of the world, new prospective areas being opened up and a return of activity to the Gulf of Mexico post-Macondo.

Deep water has been seen as a hot topic for 10 years, but now there is a real sense that its time has come. That said, enthusiasm for Brazil has dampened due to slow contract awards from Petrobras and a geo-market that has proven a difficult place for the service sector to make money.

While the share prices of most public subsea companies have performed well in the last 18 months, Saipem recently announced a substantial profits warning for 2013, which shocked capital markets.

However, this looks to be a Saipem-specific issue, rather than any sudden negativity within the offshore construction players as a whole.

Both Technip and Subsea 7 have moved to reassure the market that their outlook is positive.

The total backlog – a leading indicator – of the big three (Technip, Saipem and Subsea 7) at the end of quarter three 2012 was £14.5billion, no greater than in the first quarter of 2012.

Subsea, an active arena for mergers and acquisitions transactions, saw fewer deals announced in 2012 than in 2011. Major transactions included NOV’s acquisition of NKT flexibles, KKR acquiring a controlling interest in Acteon Group and Oaktree’s acquisition of ISS.

Meanwhile, several alliances have been announced, particularly between offshore construction players looking to share vessel capability or jointly compete in markets, such as Technip and Heerema signing a five-year contract for ultra deep-water projects.

Schlumberger and Cameron also formed a major new joint venture, OneSubsea.

Despite improving capital markets the IPO (company flotation) outlook is still challenging. Public company valuations have not been particularly attractive to private owners who have therefore look at different sources of new capital and different ways to exit their business.

Simmons believes the oil and gas market fundamentals continue to look very attractive and subsea will remain a high-growth long-term market.

The UK is a dominant player in the global subsea industry and, as the international arenas continue to develop, this will underpin the future for UK headquartered engineering and product companies.

Mike Beveridge is a managing director of Simmons and Company International

More from Energy Voice

Latest Posts