Subsea7 has reported a “robust” backlog of $10.4 billion in its financial results for the first quarter of 2024, with tendering activity high in both the subsea and offshore wind sectors.
To remind, in the financial results for the full year of 2023, Subsea7 reported it had secured $7.4 billion of contract awards last year, taking its backlog to $10.6 billion, a year-end level last seen in 2013.
In Q1 2024, order intake was $1.3 billion comprising new awards of approximately $830 million, including the Trion deepwater oil project in Mexico and Baltica 2 offshore substations in Poland.
The backlog at the end of March was $10.4 billion, of which $4.8 billion is expected to be executed in 2024, $4.1 billion in 2025 and $1.5 billion in 2026 and beyond. $8.4 billion is related to the Subsea and Conventional business unit and $2 billion to the Renewables business unit.
Revenue for the first quarter was $1.4 billion, an increase of $149 million or 12% compared to Q1 2023, said to be due to increased activity in the Subsea and Conventional business unit with strong demand within the offshore oil & gas sector.
Adjusted EBITDA was $162 million, an increase of $55 million or 52% compared to Q1 2023, said to be driven by the Subsea and Conventional business unit reflecting high activity levels and the execution of projects awarded at improved margins.
Net operating income was $20 million compared to net operating loss of $15 million in the prior year period. Net finance costs of $14 million, a net foreign exchange gain of $49 million, and a tax charge of $26 million, resulted in net income for the quarter of $29 million compared with net loss of $29 million in the prior year period. Net debt was $782 million, including lease liabilities of $572 million, up from $458 million on December 31, 2023, reflecting the addition of two new vessel charters and the extension of one existing vessel charter.
“Subsea7 delivered a strong operational and financial performance in the first quarter with Adjusted EBITDA of $162 million – up 52% on the prior year – and the Group is on track to achieve its full year objectives. Our backlog remained robust at $10.4 billion, giving us clear visibility on the remainder of 2024 and 2025,” said John Evans , Subsea7 CEO.
“Tendering activity is high in both the subsea and offshore wind sectors, and we are confident that the Group’s differentiated, value accretive solutions and strong, collaborative client relationships position us well to grow the backlog with high-quality contracts at improved margins.”
Activity in Q1 2024
During the first quarter, Subsea7 said it had experienced normal seasonality due to winter conditions in parts of the Northern Hemisphere, while activity in the Southern Hemisphere was high. Subsea activity continued on the Bacalhau development in Brazil with the installation of rigid risers and flowlines by Seven Vega, while Seven Pacific and Seven Cruzeiro installed umbilicals and other subsea structures.
Early offshore activities commenced for Mero 3 with the installation of the FPSO mooring system. In Senegal, Seven Seas and Seven Sisters completed their final scopes for the Sangomar project , installing risers and umbilicals and hooking up the floating production unit (FPU).
In Saudi Arabia, Seven Borealis completed its pipelay scope at Marjan 2 before transiting to Guyana. In Australia, Seven Oceans began installation activities at Scarborough and Seven Oceanic began installation activities at Barossa .
In the offshore wind market, activity included cable lay at Yunlin and Zhong Neng in Taiwan while, in the UK, Seaway Alfa Lift continued installation of transition pieces at Dogger Bank A in the UK. In March, Seaway Aimery began cable lay at Moray West .
Vessel utilization for Q1 was 73%, compared with 67% in Q1 2023. On March 31, 2024, there were 40 vessels in the company fleet, including 12 chartered vessels and one vessel under construction.
Outlook
For the full-year 2024, Subsea7 expects revenue between $6 billion and $6.5 billion, while adjusted EBITDA is expected to be within a range from $950 million to $1 billion. In full year 2025, as the mix of activity continues to shift to projects won in a more favorable environment, the company noted that its adjusted EBITDA margin is expected to be within an 18 to 20% range.
“Bidding for subsea and offshore wind work remains very active and we continue to engage early with clients to help them realise their development plans which now extend beyond 2026,” Subsea7 concluded.