Kvaerner can deliver such projects at a cost which is attractive even with oil prices at levels around US$50/bbl, but the timing of new projects remains uncertain, says Norwegian engineering and fabrication group Kvaerner.
The firm, which is working on Statoil's Johan Sverdrup mega-project in Norway, has focused on reducing costs over recent years, resulting in increased margins over the last year. During Q3, two jackets and the topside for Johan Sverdrup passed 20% completion.
It is hopeful of an uptick in activity, saying that there are several signals of upcoming prospects, including FPSOs, as well as unmanned wellhead platforms with tie-backs to existing infrastructure. But it is not sure when this will come.
In Q3, the firm's total revenues, were $334 million (NOK 2,727 million), compared to $442.5 million (NOK 3,615 million) in the same quarter 2015. But, adjusted EBITDA was up at $32.4 million (NOK 265 million), compared to N$20.3 million (NOK 166 million) in Q3 last year.
As of 30 September 2016, Kvaerner's order backlog was $1028 million (NOK 8,397 million), down from $1246 million (NOK 10 172 million) at the end of Q2. Order intake was $128.5 million (NOK 1 049 million) in Q3, including the $42.8 million (NOK 350 million) pre-EPC call off for preparations and docking of the Njord A platform at Kvaerner's Stord facilities.
"Our market position and financial platform give resilience to manage the current volatile market cycle. Simultaneously, this strength allows us to consider structural measures to grow and create an even more robust Kvaerner," says Kvaerner's President & CEO Jan Arve Haugan.
"The oil and gas market remains challenging, but Kvaerner is well prepared for a market with continued volatility. The company will continue to reduce costs and strengthen its competitive power. Kvaerner expects some few projects in relevant segments to come up for contract award in 2016, 2017 and 2018. There are several signals of upcoming prospects, including FPSOs as well as unmanned wellhead platforms with tie-backs to existing infrastructure. The improvements over the last few years mean that Kvaerner can deliver such projects at a cost which is attractive even with oil prices at levels around $50/bbl.
"Oil companies with plans for new projects seem to put more emphasis on selecting contractors based on safe and predictable delivery connected to schedule, quality and total price. The timing of new projects remains uncertain. We are pursuing prospects to secure an effective capacity utilization during 2017," adds Haugan.