Subsea 7 chief executive John Evans says the company delivered solid revenue and EBITDA growth in Q1 2021 compared with the same period in 2020
“Although we experienced a relatively quiet quarter for announced new orders, the group’s backlog remains robust at US$6.0Bn and tendering activity for oil and gas projects has improved in certain regions of the world, with several contracts expected to be awarded to the industry in the coming months,” Mr Evans said.
“Our high renewables backlog adds to our revenue visibility and demonstrates the advantage of a diversified energy services strategy. We look ahead with optimism to a recovery in new order flow in our oil and gas business as well as continued, strong growth in our well-established offshore wind business.”
Mr Evans said Subsea 7’s two-pronged strategy – based on ‘Subsea Field of the Future’ and ‘Energy Transition – Proactive Participation’ – made further progress in the quarter with the company’s first carbon capture and storage award, for the Northern Lights project in Norway, as well as the establishment of a joint venture to develop the Salamander floating offshore wind project in Scotland.
Describing the outlook for the rest of 2021, Subsea 7 said the outlook for oil and gas project awards saw a gradual improvement in the first quarter, although tendering activity remains focused on certain regions with advantaged economics.
The pace of tendering in Brazil has gained momentum with several projects scheduled to be awarded to the industry this year, and early engagement activity in Norway is high, which should drive increased tendering for EPCI projects from the end of the year onwards. The Gulf of Mexico remains an active market for smaller tie-back opportunities. While the offshore phase of these new contracts would fall in the period from late 2023 onwards, Subsea 7’s cost reduction plan is designed to optimise use of the fleet in the interim period.
Tendering in renewables remains active for projects expected to be awarded to the industry in early 2022, including in Asia, Europe and the US.
For the remainder of 2021, Subsea 7 will benefit from a high level of visible activity afforded by its backlog, but the company said quarterly results may be adversely impacted by the net costs associated with the Covid-19 pandemic.
“We continue to expect that revenue in 2021 will exceed the prior year level,” said the company. "While it is difficult to predict the operational and financial impact of Covid-19, adjusted EBITDA is expected to improve year-on-year and we forecast net operating income to be positive.”
In Q1 2021, revenue was up 33% year-on-year to US$1.0Bn and adjusted EBITDA was up 50% to US$102M after incurring net Covid-19 costs of approximately US$9M.
The company’s backlog is US$6.0Bn, of which 30% is renewables, with US$3.4Bn to be executed in 2021. Net cash generated from operations was US$71M in the quarter.
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