Subsea 7 expects to save US$550 million through its plans to cut 2500 jobs and 12 vessels from its fleet, the firm said today as the offshore industry continues to suffer from low oil prices.
The firm, which had announced its staff and vessel reduction plans in May, saw 2Q revenues drop $1.3 billion, down $553 million on 2Q 2014, "reflecting the difficult industry conditions and declining workload." Quarterly operating profit fell to $169 million from $350 million a year earlier.
The firm said the drop in revenues were expected to significantly impact full year results, especially when set against 2014's record numbers.
"The sustained downturn in oil company expenditure continues to result in lower industry activity and the timing of new awards to market remains highly uncertain," said Subsea 7 CEO Jean Cahuzac.
"By balancing the implementation of its cost reduction program with a focus on maintaining its core in-house expertise and capability, Subsea 7 remains well positioned to continue to deliver its projects in a consistent and efficient manner and capture future business opportunities."
Subsea 7 says by working with clients early on in projects and in partnership with the likes of KBR and Granherne and OneSubsea, through recently announced alliances, the firm will be able to offer lower cost project solutions, strengthening its position, despite the current market.
Further more, while short-term deepwater projects are taking a hit, Subsea 7 says the "fundamental long-term outlook for deepwater subsea field developments remains intact."
The group is due to reduce its capacity by 2500 people and 12 vessels by early 2016, delivering expected annualized savings of about $400 million in employee related costs and about $150 million in vessel costs.
But the firm has still been taking in new orders, totaling $0.9 billion, including a two-year contract off Brazil for the pipelay support vessel (PLSV) Seven Seas and a large contract for the Maria project, offshore Norway. Order backlog, at the end of June, was $7.2 billion, $0.4 billion lower than at the start of the quarter.
In 2Q, Subsea 7 was working on Talisman's Montrose project, the Aasta Hansteen and Martin Linge projects offshore Norway, and offshore installation on the UK North Sea Catcher project, using the Seven Navica pipelay vessel.
Offshore Nigeria, Subsea 7 has been working on the OFON 2 and Erha North projects, and the two Lianzi projects, offshore Angola. It is due to start work on the TEN project, offshore Ghana, in 3Q.
Subsea 7's seven PLSVs on long-term contracts, offshore Brazil, delivered another strong quarter with high utilization, the firm added.
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