Subsea 7 has released first quarter financials that reflect the turmoil in the offshore oil and gas market and what it sees as the growing potential of the offshore wind market
Subsea 7 chief executive John Evans said, “Subsea 7 had a strong start to 2020, with the announcement of four contract awards in the subsea and conventional business units.
“Just eight weeks ago, we discussed our positive outlook for the year, with an expectation of continued momentum in new order intake and a tightening market for some of our high-end pipelay vessels,” Mr Evans said. But he went on to say that the outlook has changed significantly as a result of the impact of the Covid-19 pandemic on demand for energy and the price of oil.
As a result, the company has embarked on a comprehensive cost reduction programme, more details of which will be announced in the second quarter. This is expected to include a reduction in Subsea 7’s global workforce.
Mr Evans said Subsea 7 is also implementing longer-term plans to reshape the business to reflect the changed outlook for the industry.
Of the company’s renewables and heavy lifting business unit, Mr Evans said it had proven "somewhat countercyclical" and progress is continuing in tendering for offshore windfarm projects.
Mr Evans said that compared to the offshore oil and gas market, the outlook for renewables is more positive and Subsea 7’s tendering team remains in active negotiations on a number of projects.
“The business unit benefits from a diverse range of clients, many of which are not impacted by low oil prices and have not needed to make material cuts to near-term investment plans," Mr Evans said.
“While, in the short term, competition for these contracts is high, we are confident these clients remain committed to their clean energy initiatives and we continue to view the offshore wind market as a source of sustainable, profitable growth for Subsea 7 in the longer term,” Mr Evans concluded.
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