Aberdeen-headquartered KCA Deutag has narrowed its pre-tax losses by £14.5million, but said the recovery in the oil market still lacks momentum.
The drilling and engineer contractor posted pre-tax losses of £58.3million for the first half of the year, reduced from losses of £72.8m in the same period last year.
The firm said, despite a pick up in oil price and tendering remaining high, it is “challenging” to covert it into contracts.
Its offshore services business performed better than in the first quarter of the year and Q2 last year, which it said “was not the result of a single country operation”, with most delivering steady or improved performance levels.
KCA Deutag did highlight a recent award of a three-year drilling contract on Total’s North Alwyn and Dunbar platforms in the North Sea and improved Norwegian operations.
The firm also praised “strong” activity in Azerbaijan, with a recent joint venture with Socar, which it believes will lead to growth in the Caspian and Central Asia.
However, despite oil now being above $70 a barrel, chief executive Norrie McKay said a recent fall back has lead to “suffering of market sentiment”.
He said: “Whilst Brent oil prices remain above $70 per barrel, they have fallen back over the last three months, leading to some suffering of market sentiment.
“As a result of this, the recovery continues to lack momentum and as we reported in Q1, 2018, whilst tendering activity remains high, conversion into contracts remains challenging.”
KCA’s rig design subsidiary firm RDS has continued at “relatively low levels with limited opportunities”, according to the report.
The firm said brownfield work in the UK has continued at similar levels to prior quarters.
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