Finance News

oceaneeringlogoOceaneering International, Inc. (NYSE: OII) has reported record quarterly earnings for the second quarter ended June 30, 2013. On revenue of $820.4 million, Oceaneering generated net income of $98.8 million, or $0.91 per share.  During the corresponding period in 2012, Oceaneering reported revenue of $672.5 million and net income of $72.6 million, or $0.67 per share.

Summary of Results

(in thousands, except per share amounts)


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Diluted Earnings Per Share (EPS)








  Year over year and sequentially, quarterly EPS increased as all business segments achieved higher operating income, led by Subsea Products and Subsea Projects. 

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our quarterly EPS was above our guidance range, and was up 32% over the first quarter of this year and up 36% compared to the second quarter of 2012.  Our above-guidance performance was attributable to sales of subsea hardware, demand for asset integrity services offshore Norway, and early completion of a theme park project.  We achieved record quarterly operating income from Remotely Operated Vehicles (ROV), Subsea Products, Asset Integrity, and Advanced Technologies.

"Our outlook for the second half of this year remains very positive and essentially unchanged from last quarter.  Given this outlook and our year-to-date performance, we are raising our 2013 EPS guidance range to $3.20 to $3.35 from $3.10 to $3.30.  Compared to 2012, we continue to forecast income growth for all of our operating segments in 2013.  Relative to the first half of 2013, we expect to generate higher operating income during the second half led by ROV and Subsea Projects. 

"Compared to the first quarter, Subsea Products operating income rose on the strength of increased revenue and profitability from tooling and subsea hardware.  Subsea Products backlog at quarter end was $902 million, up from our March backlog of $776 million and $621 million one year ago.  The sequential and year-over-year increases in backlog were predominantly attributable to umbilical awards.  During the quarter we announced two large umbilical contracts, one for offshore Egypt and one for the U.S. Gulf of Mexico (GOM).

"Subsea Projects operating income increased due to a seasonal uptick in GOM demand for deepwater intervention and an escalation of work under our field support vessel services contract offshore Angola.  The work offshore Angola included the provision of another chartered vessel, the Maersk Attender, for half of the quarter.  The charter term on the Maersk Attender runs through September 2013, followed by two 45-day renewal options, subject to our customer's work program.


MillbanklogoMilbank has advised the lenders and hedge counterparties on a further US$500 million term loan financing for Isramco Negev 2 LP (Isramco) in support of its share of the development of the Tamargas field located of the coast of Israel.  The Loan proceeds partially refinance the US$750 million bridge and term loans extended to Isramco in 2011 and also support future development and expansion of the field which became operational in March 2013.

The Tamar gas field is located off the coast of Israel and commenced operations in March 2013 after a 3 year development.  Isramco is the largest local partner in the Project and owns a 28.5% stake in the Tamar gas field.  The other investors are Noble Energy, Delek Drilling, Avner Oil and Gas and Alon Gas Exploration.  The gross resource estimate of Tamar gas field is ten trillion cubic feet (Tcf).

This financing was arranged by Deutsche Bank, who also led the 2011 financings, and Natixis and was successfully syndicated to a large number of onshore and offshore financial institutions.  Deutsche Bank has now arranged US$1.25 billion in debt financing for Isramco's share of the development of the Tamar offshore gas field since 2011.  John Dewar, a partner in Milbank's London project finance team, said, "The successful syndication of this prestigious and high-profile financing demonstrates the high level of investor confidence in the future prospects of the geopolitically important Tamar gas field."

The team was led by John Dewar and included Oliver Irwin, Vicky Cox, Matthew Mortimer, John Goldfinch and Claire Hall in Milbank’s London Project Finance, Tax and Alternative Investment practices.



Headline revenue increased by 18.5% to $1.2bn (2012: $1.01bn)

Headline EBITDA* up 44.7% to $290.8m (2012: $201.0m)

Operating free cash flow of $123.2m (2012: outflow of $44.0m)

Sale of non-core Connectors and Measurements (C&M) business generated net proceeds after transaction costs of $591.5m

Net proceeds of C&M used to repay senior debt of $408.5m, with the balance earmarked for investment in the business

Restructuring of $4.1bn of shareholder loans eliminating reserves deficit

Pro forma leverage fell from 7.9x to 6.2x in the year

Liquidity improved from $173.4m to $201.0m

Photo: Connecting lubricator valve to BOP (blow out preventer)



Operating and financial review

International oilfield services company, Expro, has announced strong annual results for the year ending March 2013, which highlights an increase in revenue of 18.5% to $1.2bn on the previous year, or 20.6% on a constant currency basis.

These results were driven by a growth in activity across the company’s eight business units, combined with a shift in the business mix towards higher value subsea safety systems and production systems. This delivered a higher operating margin of 24.2% and Headline EBITDA growth of 44.7%, to $290.8m.

Strong performance continued in Expro’s largest business unit, Europe CIS, with revenue growing by 13.6% This was driven by increased well testing business in the UK and subsea and drill stem testing activity in Norway.

 Sub-Saharan Africa revenue closed 15.4% higher than the previous year, which was bolstered by enhanced subsea activity in Angola and well testing demand across the region.

Asia’s increased revenue was driven by the Australian market, as well as subsea activity in China, resulting in a very positive year, ending 29.5% higher than 2012.

Middle East North Africa finished 5.2% higher due to a strong performance in Saudi Arabia, particularly well testing.

In North American Land, revenue declined by 7.2% as a result of lower gas prices and reduced rig activity/numbers in gas basins.  However the North America Offshore business exhibited steady growth and finished the year with revenue up 16.7%. This was primarily driven by strong levels of well test, subsea and perforation activity in the Gulf of Mexico.

Latin America had an excellent year, with revenue growth of 52.9% thanks to buoyant wireline activity, combined with increased activity in well testing, fluids and subsea work in Brazil.

Expro PTI, the company’s production solutions business, also demonstrated extremely strong results and high growth, with an increase in revenue of 67.9% in comparison to the previous year.

Finally, Equipment Sales continued to deliver notable growth, improving revenue by 31.8% on the previous year.

Cashflow and balance sheet

The increase in Headline EBITDA, combined with effective management in Expro’s asset utilisation, capital expenditure and a focus on working capital, resulted in increased operating free cashflow of $123.2m (2012: outflow of $44.0m).

The sale of Expro’s non-core C&M business generated net proceeds (after transaction costs) of $591.5m, of which $408.5m was used to repay senior debt, with the remainder earmarked for investment in the business.  This de-leveraging resulted in lower cash interest costs of $198.9m from $212.5m, with a further reduction expected on the full year effect in the cost of financing in the year to 31 March 2014.

$4.1bn of shareholder loans were capitalised as equity, reducing the Group’s ongoing non-cash interest costs by $498.7m, resulting in a $482.8m equity position from a $3.24bn cumulative deficit at the end of last year. Net debt improved by $385.8m to close at $1.81bn.

These strong financial results mark Expro’s 40th anniversary in 2013, including the re-launch of the company’s six core areas of capability: exploration and appraisal testing, subsea safety systems, drilling and completion, flowback and clean-up, production and well integrity and intervention.  The company has continued to invest in its workforce over the past year, hiring over 1,000 people globally, developing a range of employee development and retention programmes to meet the business’ operational demands.

Commenting on Expro’s overall performance, CEO, Charles Woodburn, said:

“Expro has performed well during the year, delivering excellent growth across the business. We believe that our continued focus on efficient delivery in our core competencies of well testing and well intervention, together with our investment in subsea safety systems and production systems, competitively positions us within the market place.  This has enabled us to generate robust financial returns through effective investment of our resources.

“Our strong EBITDA performance, coupled with the bolstering of our balance sheet through the sale of our non-core Connectors and Measurements business, has enhanced Expro’s capital structure and ability to generate cash to reinvest into the core business.

As we look forward to the year ahead, Expro will continue to invest in improving its asset base, while expanding and developing our work force.

With a strong order book and continued commitment to safe and effective service delivery, we feel confident in delivering further growth in 2014.”

All comparative percentages in this section are in constant currency.

For complete details on Expro's financial results for 2013 click here


seadrill_logo_13The company refers to the press releases dated November 5, 2012, and February 11, 2013, which announced the transaction to integrate Seadrill Limited's ("Seadrill") tender rig division into SapuraKencana Petroleum Berhad ("SapuraKencana") and the signing of the conditional Sale and Purchase Agreement ("SPA") between the parties.

Seadrill and SapuraKencana have now completed the previously announced transaction pursuant to the conditional SPA.

The agreed upon acquisition price is for an enterprise value of US$2.9 billion, which includes cash, SapuraKencana shares, all debt in the tender rig business, and Seadrill's future capital commitments for newbuilds.

The incremental 400.8 million shares received by Seadrill today bring Seadrill's equity holding to approximately 12 percent of the outstanding shares of SapuraKencana. At today's closing share price of RMB3.18, Seadrill's total shareholding will have a gross value of approximately US$753 million.

In addition, John Fredriksen, Chairman of Seadrill Limited, is a nominee to the Board of Directors of SapuraKencana.

John Fredriksen, Chairman, President and Director of Seadrill says in a comment, "We are pleased to have completed this important transaction with our long-term partner, SapuraKencana. We look forward to support the integration of the tender rig fleet in order to facilitate a smooth and orderly transition for the customers. This transaction will free up significant financial flexibility for Seadrill, and the proceeds will as previously stated be used over time to continue to aggressively grow our modern ultra-deepwater and jack-up exposure."

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.


petrobras-logoOn 07/16 in Rio de Janeiro, Petrobras  signed two financing programs with the Japan Bank for International Cooperation - JBIC for the offer of two lines of credit amounting to US$ 1.5 billion. Mizuho Bank, Ltd. is the agent bank for these programs and the lines of credit will be 60% financed by JBIC and 40% by private Japanese financial institutions, which are insured by Nippon Export and Investment Insurance (NEXI).

The lines of credit are for Petrobras to purchase equipment and services from Japanese companies in Brazil and abroad, based on the memorandum of understanding signed in October 2012, when a strategic partnership between JBIC and Petrobras was established.

Petrobras and Japan Bank for International Cooperation has built up a close cooperative relationship over many years, with a number of joint operations already implemented. The two financing programs taken out represent vast funding possibilities for these entities, offering new ways of financing, and will further strengthen the relationship between the parties.


WoodMackenzielogoDrilling activity and spend will significantly increase in global deepwater markets over the next decade according to new analysis by Wood Mackenzie. The Future of Global Deepwater Markets study indicates well spend is expected to grow from US$43 billion in 2012 to US$114 billion in 2022 challenging the industry to keep up with this unprecedented growth.  

Considering the deepwater sector has eclipsed that of onshore and shallow water in the last decade with respect to both discovered volumes (41 percent) and value created ($351 billion), this increase is not as surprising as previously thought. In addition, Wood Mackenzie saw a 39 percent growth in deepwater and Arctic net acreage licensed by the 20 leading deepwater players in 2012. 

"Deepwater has accounted for most of the discovered volumes during this time, but this has not been without increasing technical and commercial challenges," said Malcolm Forbes-Cable, Senior Management Consultant at Wood Mackenzie and author of the study. 

The study indicates global drilling activity returned to pre-Macondo highs in 2012 and forecasts bullish growth in deepwater, maintaining an overall compound annual growth rate of nine percent over the next decade.  Arctic drilling will also start to pick up by the end of the decade however it will only represent three percent of the wells drilled out to 2022. 

Wood Mackenzie believes the number of exploration, appraisal and development wells will increase by 150 percent – rising from 500 to 1,250 wells per year. 

"To meet the forecasted well demand the fleet will require 95 additional deepwater rigs to be constructed between 2016 and 2022, representing US$65 billion of investment," explained Forbes–Cable. "This will require the longest period of deepwater rig construction to date, representing a change for the deepwater sector from cyclical to sustained growth." 

Existing rig orders and new-builds required to meet demand suggest that the rig contractors will need an additional 37,000 workers over the next decade to operate the fleet. According to Wood Mackenzie, this simply cannot be met with existing personnel and the historical rate of recruitment.

This tightness in the deepwater rig market has been driven by an accelerated shift to newbuild rigs by operators in the wake of Macondo, which has set in motion increased regulation and heightened the focus on risk mitigation by the operators. 

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