Saipem Reduces Loss, Debt, Gains Gas Jobs

Italian contractor Saipem has ended 2017 with a smaller annual net loss than it ran up in 2016, but new orders were down year on year too.

CEO Stefano Cao said: “Despite the persistence of a challenging market context, the results for 2017 confirm the solid operational and managerial performance, underscored on more than one occasion during the year, with a constant downward trend in net debt and a good intake of new contracts.” He also cited the end of litigation with Algerian state Sonatrach as positive. Saipem noted that an adverse arbitration ruling there affected its onshore construction earnings in 4Q2017 but did not disclose an amount. Other sources have put the compensation  at $135mn.

Saipem’s net 2017 loss of €328mn was down from its 2016 loss of €2.09bn but its 4Q net loss was €271mn, two-thirds more than its 4Q2016 loss of €162mn.

New contracts were €7.4bn in 2017 (€8.35bn in 2016). Among the largest awarded in 4Q2017 were: by Saudi Aramco to engineer, procure, construct and commission (EPCC) the Hawiyah gas plant expansion project in southeastern Arabia; and by Eni for a 15-month drilling contract offshore Mozambique starting 2019 using Saipem 12000; and again by Eni, an earlier contract to drill two wells plus the option of a third offshore Cyprus using the same drillship; and by Rosneft/Eni for the late December 2017 drilling of the first-ever deepwater well, ‘Maria’, in the Russian Black Sea by Scarabeo 9 plus the option of a second well. 

Late last month, Saipem 12000 was also mobilised by Eni to drill its first exploration well offshore Morocco.  The purely Eni drilling contracts are targeting gas, while Rosneft is seeking oil.

Saipem's net debt declined to just under €1.3bn at end-2017, from €1.45bn twelve months earlier, and is forecast to fall further to €1.1bn at end-2018.