SBM Offshore says there are no signs of recovery before 2018, as the floating production specialist reduced its workforce by 3200 in 2015, with more job cuts expected this year.
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Image of the Cidade de Saquarema in Guanabara Bay, courtesy of SBM Offshore. |
About 1500 of the job cuts were full time employees and contractor staff, and the remaining 1700 were construction yard positions related to the winding down of projects under construction. For 2015, restructuring costs totaled US$55 million, and overall restructuring costs were $63 million, which are expected to generate annualized savings of approximately $80 million.
Due to the prolonged downturn, SBM will cut a further 400 positions this year at a cost of $30 million, which is expected to generate a further $40 million of annualized cost savings in addition to the previously announced savings of $80 million beginning in 2016.
“While client investment decisions continue to be postponed, the company has taken a view that a recovery is unlikely before 2018. Nevertheless, the company will maintain an engineering overcapacity to position itself for a future market upturn,” SBM said. “This leads to cumulative directional turnkey EBIT losses of approximately $150 million over 2016 and 2017. Should the industry downturn persist additional steps will be considered to manage the company's cost base.”
SBM’s revenue for the year took a 26% hit to $2.6 billion, compared to 2014’s $3.5 billion that the company said was mainly attributable to lower turnkey segment revenues.
During the year, SBM completed the Cidade de Maricá topside integration work at the Brasa yard, and the vessel sailed away on 19 December and is currently on location undergoing first oil readiness acceptance testing. The charter contract includes an initial period of 20 years, and delivery to Brazilian giant Petrobras is scheduled for Q1 2016.
Also in Brazil, construction is ongoing for the Cidade de Saquarema FPSO. Since 20 December, the vessel has been undergoing topside module integration at Brasa. The charter contract for the FPSO includes an initial period of 20 years. Delivery to Petrobras is scheduled for mid-2016.
SBM will also be decommissioning the Marlim Sul FPSO and should be complete this quarter. Following decommissioning, the vessel will be marketed for future conversion opportunities.
Construction was completed on the Turritella FPSO in Singapore, and the vessel arrived on location in the US Gulf of Mexico. Start-up of the facility is expected in mid-2016. The charter contract includes an initial period of 10 years with extension options up to a total of 20 years.
Last month, SBM accepted an out of court settlement over allegations relating to the Petrobras Lava Jato corruption scandal, noting that the settlement did not amount to an admission of guilt.
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