SBM Offshore Posts Steep Loss; No Dividend After Project Delays
02 March 2012 - 8:14PM
Dow Jones News
Dutch oil services firm SBM Offshore NV (SBMO.AE) posted a steep
2011 net loss Friday and scrapped its dividend payment as charges
for delayed projects mounted to almost $1 billion.
The firm has been facing problems finalizing mainly two
projects--the Norwegian Yme oil and gas field, and Deep Panuke in
Canada.
The delays in both projects have already triggered the departure
of some of the company's top management. In August last year,
former Chief Executive Tony Mace announced his intention to step
down in order to take responsibility for the delays, while in
January, SBM's Chief Financial Officer Mark Miles said he would
depart in May.
For 2011, SBM Offshore posted a net loss of $440.6 million
following charges of $978 million, compared with a net profit of
$276 million the previous year.
The company also announced a further $407 million charge for
delays in the two projects on top of a previously announced charge
of $450 million, plus a couple of minor charges for other
projects.
The extra charge exceeded analysts' expectations for additional
charges in a $100 million to $300 million range.
The company said it will not pay a dividend to investors.
Revenue in 2011 was slightly up, to $3.2 billion from $3.1
billion a year-earlier.
The Dutch oil services firm is involved in legal action over
cost overruns on Yme, operated by Talisman Energy Inc. (TLM), as
well as for Deep Panuke, operated by EnCana Corp. (ECA). SBM said
it hopes to recover the extra costs from its clients, but has been
forced to write down the overruns immediately due to the
uncertainty of success in its legal challenge.
The company's shares opened Friday 1.2% below Thursday's close
of EUR13.28.
"Resolution of the Yme difficulties is an absolute priority and
we are in constructive discussions with both clients on the best
way forward," the company's chief executive Bruno Chabas said in a
statement.
Analysts said the size of the write-down is disappointing.
"However, we have the feeling that after this kitchen-sinking
operation the company is well positioned," Rabobank said in a note.
Rabobank maintained its buy rating for SBM Offshore, but said the
company's results imply a lowering of the price target by
approximately EU0.50, to EUR19.50.
But the company was more optimistic for the year-ahead. For
2012, SBM Offshore expects $4 billion in turnover on the "strongest
order portfolio on record" of $16.9 billion, up from $11.5 billion
the previous year.
-By Archibald Preuschat, Dow Jones Newswires; +31 20 5715 218;
archibald.preuschat@dowjones.com
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