Subsea 7 S.A. Announces Second Quarter and Half Year 2019 Results

Aberdeenshire, UNITED KINGDOM

Luxembourg – 25 July 2019 – Subsea 7 S.A. (the Group) (Oslo Børs: SUBC, ADR: SUBCY, ISIN: LU0075646355) announced today results for the second quarter and first half of 2019 which ended 30 June 2019.

Second Quarter highlights

  • Revenue of $958 million, Adjusted EBITDA of $171 million and margin of 18% reflected steady performance in SURF and Conventional offset by low levels of renewables activity in the quarter
  • $4.6 billion order backlog at 30 June 2019 with $395 million of new awards and escalations in the quarter
  • 2019 share repurchase programme completed 11 July 2019. Year to date, $279 million has been returned to shareholders including NOK 1.50 per share dividend paid in the second quarter
  • New $200 million share repurchase programme announced, supported by the recovering offshore oil and gas market and Subsea 7’s solid financial and liquidity position

Jean Cahuzac, Chief Executive Officer, said:

‘The recovery in offshore oil and gas continues to make steady progress as lower cost solutions for offshore developments service the growing global demand for energy. Our market-leading technology and engineering expertise applied to integrated and standalone developments enable us to support our clients as they sanction and develop their projects. We are working with our clients and alliance partners from the early stages of the field life cycle, and the number of tenders and early engineering studies we are engaging in continues to grow.

We are positive on the outlook for our markets. We have a modern and versatile fleet, strong portfolio of proprietary technology and teams of highly capable people able to deliver complex solutions efficiently, reliably and safely. The new share repurchase programme announced today reflects our confidence in the gradually recovering market, our secure financial position and the diminishing capital investment needs of our business in the medium-term.’

Operational performance highlights

Project planning and engineering activity increased year-on-year mainly driven by EPIC contracts awarded in 2018 and early 2019, which require 12 to 18 months of preparation before the offshore phases commence. Offshore activity on EPIC projects was lower than the prior year period reflecting the low volume of projects awarded in 2016 and 2017.

On the West Nile Delta (GFR) Phase Two project, offshore Egypt, spools and flying leads were installed, using the flex-lay vessels Seven Seas and Simar Esperança. In the US Gulf of Mexico, the Mad Dog 2 project progressed with qualification and fabrication activities and, for the Manuel project, work continued on engineering, procurement and fabrication of the Electrically Heat Traced Flowline (EHTF). Offshore Australia, hyperbaric welding and subsequent testing was successfully completed on the Sole project. In the North Sea, Seven Oceans completed the first reel-lay campaign on the Nova project, offshore Norway, and fabrication progressed at Subsea 7’s Pipeline Bundle facility in Scotland for the Snorre project, enabling the first Pipeline Bundle for this project to be towed out in early July.

Offshore Brazil, the four pipelay support vessels (PLSVs) on long-term day-rate contracts continued to perform well with high levels of utilisation.

Conventional activity in shallow water areas included the completion of the 20” pipeline pull-in for the PUPP project, offshore Nigeria, using Seven Antares, and completion of umbilical installation for the Hasbah project, offshore Saudi Arabia.

Life of Field activity included inspection, repair and maintenance (IRM) services in the US Gulf of Mexico under a new contract awarded to i-Tech 7 in the quarter and a successful weld inspection campaign using ROV-deployed technology offshore Australia, a first for the client which had previously relied on diving services for this workscope.

Renewables and Heavy Lifting activity included an oil and gas decommissioning project in the North Sea, installation of wind turbine foundations and transition modules on the Formosa I (Phase 2) project, offshore Taiwan, and cable lay activity on the Hornsea One wind farm project, offshore UK.

Vessel Utilisation was 75%, unchanged from the prior year period with lower levels of utilisation for Renewables and SURF projects offset by higher utilisation for the PLSVs and Life of Field services. At 30 June 2019, Subsea 7 had 34 vessels in its fleet, including one vessel under construction and two stacked vessels. The new-build reel-lay vessel, Seven Vega, was launched in May, a significant construction milestone, and is now undergoing outfitting and testing ahead of scheduled delivery in early 2020.

Financial performance highlights
Second quarter revenue was $958 million and Adjusted EBITDA was $171 million, down 17% and 8% respectively. Adjusted EBITDA margin was18%, reflecting steady performance on SURF and Conventional projects offset by low levels of activity in Renewables and Heavy Lifting.  

Subsea 7’s new awards and escalations totalled $395 million in the second quarter, including the Johan Sverdrup Phase Two project, offshore Norway, announced in June. The pace of offshore oil and gas awards to market is gradually increasing supported by higher tendering and early engagement activity. Larger greenfield awards often include engineering studies and integrated solutions, and so take longer to progress from tender to project sanction and award. Order backlog at 30 June 2019 was $4.6 billion.

The Group’s financial and liquidity position remains strong. $204 million was returned to shareholders in the quarter through share repurchases and a special dividend. Following the completion on 11 July 2019 of the $200 million share repurchase programme announced on 28 February 2019, a further share repurchase programme for $200 million, valid for two years, was announced today. Subsea 7’s activities are cash generative and the Group’s priorities are to invest in the business, maintain an investment grade profile and return surplus cash to shareholders. The share repurchase programme gives the Group flexibility to balance these priorities to support long-term sustainable value creation.

Cash and cash equivalents was $420 million at the quarter end and net debt was $221 million, including $396 million of lease liabilities (IFRS 16). During the second quarter cash generated from operating activities of $72 million included a $63 million decrease in net operating liabilities reflecting timing of milestones on certain projects. The Group’s $656 million Revolving Credit Facility was unutilised at 30 June 2019.

The pace of SURF awards to market so far this year has been steady and Subsea 7 has announced four new project awards year to date. The pace of awards is expected to increase over the next 12 months as clients progress their investment decisions on the first phase of greenfield projects to be sanctioned since the downturn. The increase in market activity and subsequent tightening in key vessel availability in the medium-term is supporting improved pricing compared to the prior year. Demand for IRM services is steady, and market award activity for Conventional projects in the Middle East is strong.

The offshore renewables market continues to benefit from decreases in the levelised cost of electricity (LOCE) as the size of turbines and wind farms increases. The demand for offshore foundation and cable-lay services is expected to grow at a double digit pace annually in the medium-term, supporting the transition plans of several host governments to lower carbon energy. Near-term, new entrants in the foundation installation market are having a negative impact on pricing, but this is expected to improve as the market globalises and rebalances.

The full results document and associated slides are avaiable to download from

Conference Call Information

Lines will open 15 minutes prior to conference call.

Date: 25 July 2019

Time: 12:00 UK Time

Conference ID: 34322203#

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United States   631 913 1422
Norway   23 50 02 43
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Replay Facility Details

A replay facility (with conference ID 301273850#) will be available from:

Date: 25 July 2019
Time: 17:00 UK Time

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For further information, please contact:

Isabel Green

Investor Relations Director


Telephone: +44 20 8210 5568


Special Note Regarding Forward-Looking Statements

Certain statements made in this announcement may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘scheduled’, ‘seek’, ‘should’, ‘will’, and similar expressions. The forward-looking statements reflect our current views and are subject to risks, uncertainties and assumptions. The principal risks and uncertainties which could impact the Group and the factors which could affect the actual results are described but not limited to those in the ‘Risk Management’ section in the Group’s Annual Report and Consolidated Financial Statements 2018. These factors, and others which are discussed in our public announcements, are among those that may cause actual and future results and trends to differ materially from our forward-looking statements: actions by regulatory authorities or other third parties; our ability to recover costs on significant projects; general economic conditions and competition in the markets and businesses in which we operate; our relationship with significant clients; the outcome of legal and administrative proceedings or governmental enquiries; uncertainties inherent in operating internationally; the timely delivery of vessels on order; the impact of laws and regulations; and operating hazards, including spills and environmental damage. Many of these factors are beyond our ability to control or predict. Other unknown or unpredictable factors could also have material adverse effects on our future results. Given these factors, you should not place undue reliance on the forward-looking statements.



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