Subsea 7 secures contract extension

Subsea 7 secures contract extension

den 1 augusti 2017

Strong figures for the second quarter come along with a new announcement in Brazil.

Subsea 7 S.A. is a provider of seabed-to-surface engineering, construction and services contractor to the offshore energy industry. The Company's segments mainly include SURF and Conventional. The SURF and Conventional segment includes Subsea Umbilicals, Risers and Flowlines (SURF) activities related to the engineering, procurement, construction (EPC) and installation of systems offshore, including the long-term Pipelay Support Vessel (PLSV) contracts in Brazil.

 

London-based company sees profits rise

Subsea 7 reported sales for the second quarter of USD 1.022 billion, a 6.4 percent increase compared to the second quarter 2016. Net income increased by 5 percent to USD 144 million YoY. Total sales are estimated to exceed USD 3.9 billion for 2017, an increase of 9.6 percent of sales in 2016 (USD 3.56 billion).

However, analysts from Handelsbanken Capital Markets expect sales growth to decline in 2018 (USD 3.7 billion) and further decline in 2019 (USD 3.5 billion). Jean Cahuzac, chief executive of Subsea 7, commented the figures as follows: “Our good execution and continued focus on cost efficiency have driven another quarter of excellent results.”

 

Subsea 7 awards contract from Petrobras

At the end of July, the company has secured contract extensions worth USD 250 million from Petrobras for three pipelay support vessels (PLSVs). The vessels are currently on long-term day-rate contracts in offshore Brazil.

Subsea 7 Brazil region vice-president Marcelo Xavier said: “These contract extensions reflect our long-standing relationship with Petrobras. We are focused on delivering a safe and reliable performance. We have the right capability and capacity in Brazil to meet our clients’ needs.”

Following the extensions, the contract periods for the Seven Waves, Seven Rio and Seven Sun will be terminated during the second quarter of 2021, the third quarter of 2021 and second quarter of 2022, respectively.

 

Acquisitions and Business in Middle East

In addition to the contract extension in Brazil, Subsea 7 performed two major acquisitions during the first half of 2017 in order to push growth plans in the Middle East forward: Seaway Heavy Lifting and EMAS Chiyoda Subsea.

Jean Cahuzac said “We have made significant progress on our strategy to grow and strengthen our business. Our acquisition of certain businesses from ECS in June reinforced our position in the Middle East. As a result, we look forward to working in consortium with L&T Hydrocarbon Engineering to provide services to Saudi Aramco under a long-term agreement.”

Subsea 7 S.A. quotes with a P/E of 7.59 at around NOK 118.80 (August 1st 2017). 16 analysts values the stock with BUY, 11 with HOLD and 7 with SELL. The consensus target price is set at NOK 136.85 . However, the future development remains to be seen.

 

 

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2023-02-06 01:25:12