Subsea 7 saw its latest quarter results boosted by its operations in the North Sea, but warned rising costs in the region could impact on new projects next year.
“The level of tendering continues to be good in the North Sea but has moderated elsewhere as delays in project awards remain a feature of the industry,” the company said in its interim statement.
“Some North Sea operators have indicated that rising costs could result in the award of new projects being postponed.
“Although we have not seen a clear pattern develop, this is something which requires monitoring as it could have a short-term impact on activity levels. The fundamentals of our business have not changed and we remain positive about the medium and long-term market prospects.”
During the last three months the company continued to develop the Otter, Knarr and Laggan Tormore projects, along with engineering work on Martin Linge which is due to move offshore next year.
Revenue from its North Sea operations fell £110million to £415million on the same period last year due to the cancellation of the Fram project earlier this year, and lower margins on some of its projects.
Subsea 7 chief executive Jean Cahuzac said the company expected losses on the Guara-Lula project off Brazil to be in the same region as previously predicted, as ongoing weather problems off the country’s cost hampers development.
Earlier this year the company said it expected to lose up to £185million on the $1billion project in the Santos basement due to supply chain and weather issues.
However, a record order backlog gave the company a strong footing for the medium-to-long term, he said.
“We have achieved a record backlog of $11.billion which includes the award of three five-year contracts for new-build PLSVs in Brazil,” said Cahuzac.
Third quarter earnings at Subsea 7 rose to $359million, up from $318million the previous year, though net income fell by $34million to $160million.
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