The UK well-intervention arm of oilfield service business Aker Solutions has reported a drop in profits, despite rising demand at home and abroad.
The division, formerly known as Aker Qserv until it adopted its parent company’s name, said rising labour costs had hit profit margins last year despite annual turnover rising 8% to £108.4million. Operating profits were down 68% to £2.2million, while pre-tax profits dropped 76% to £1.4million.
The Portlethen company, whose average employees increased to 652 from 571 during the year, said that although the North Sea remained its main market it expected international expansion to be key to growth in the next two years.
In its annual report, Aker Qserv directors said that although margins had been affected by rising labour and third-party costs, the company continued to be successful in retaining its customer base in the face of severe competition.
They added: “UK North Sea operations continue to be our largest operating region and revenue increased in this area by 3%.
“Our day-to-day focus remains in this area which continues to provide a sound base from which to expand overseas.”
The firm added that international activity had maintained a high level, particular in west Africa.
The report said: “We are continuing to expand the services we provide in all business areas, however, our strategy of internationalisation has shown significant results to date and by continuing to focus on this we anticipate this will contribute significantly to the future growth of the company. The directors expect that the market will continue to improve in 2013 and 2014.”
Aker Qserv’s UK operations amounted to more than two-thirds of its turnover last year, coming in at £73.3million.
The Middle East and Africa were the firm’s other major markets, collectively representing £20.3million of turnover.
Aberdeen-based Dana Petroleum said yesterday it was partnering RWE for drilling operations on the Severn prospect in the southern North Sea.
The companies have 50% stakes in the project.
RWE is the operator for the drilling operations, which will start in a few days. Dana also said it had completed the drilling of Magnolia prospect in block 13/23a in the North Sea, but no significant hydrocarbons were encountered. The well will now be plugged and abandoned.
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