Offshore Sector Shows Improvement: Sembcorp Marine
Global exploration and production (E&P) capex spending continues to show signs of improvement, underpinned by higher oil prices, says Sembcorp Marine Ltd (SembMarine).
Offshore rigs utilization and day rates have stabilized, but rig orders recovery may take some time as the oversupply in most drilling segments has yet to re-balance.
The production segment remains encouraging and we are responding to increasing enquiries and tenders for innovative engineering solutions.
We continue to make progress in our efforts to develop and commercialise our Gravifloat technology for near-shore gas infrastructure solutions.
Demand for repairs and upgrades, especially for LNG carriers and cruise ships remains strong. Regulations on ballast water treatment requirements coming into force in the foreseeable future will further underpin the potential of this segment.
However, the immediate outlook remains challenging. It will take some time for capex spending to translate into new orders. Industry activities remain low and competition for orders remains intense. Sembcorp Marine will continue to further strengthen its balance sheet and actively pursue the conversion of enquiries into new orders.
The company sank into the red in the fourth quarter with a net loss of S$33.78 million (US$25.6 million). The loss is attributed to a lower business volume and a decline in revenue following a glut in drilling rigs choked demand. The company said it did not see any immediate recovery for rig-building orders.
"The lower revenue was largely due to lower sales from all key business segments with the exception of Repairs & Upgrades, as well as a reversal of previously recognised rig sales upon the termination of contracts with original customers," it said.
