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SBM Offshore sees improvement in deepwater segment on cost deflation

SBM Offshore sees improvement in deepwater segment on cost deflation
SBM Offshore says it seeing gradual recovery in the offshore services market as cost deflation improves the breakeven for deepwater projects.

Reporting a first half directional net income of $68m compared to $38m in the same period in 2016 SBM Offshore was positive about the outlook for the deepwater offshore sector. The increase in profit came despite an 11% drop in revenues for the first half 2017 to $835m compared to $939m a year earlier.

Bruno Chabas, ceo of SBM Offshore characterised the company’s results as “solid”.

“With the three additional FPSOs ramping up, our fleet produced repeatedly more than 1m barrels per day, which represents more than 10% of global deep water oil production. In today's oil price environment, characterised by continued low prices, deepwater field developments need to build on the competitiveness gained,” he said.

SBM Offshore won the only major FPSO award in the industry over the last 18 months for the FPSO Liza contract by ExxonMobil.

Looking at the deepwater segment cost deflation was seen as having positive effect on the market.

“Break-even prices of deepwater projects have substantially improved as result of cost deflation, more fit-for-purpose scope and leaner concept designs. In particular, deepwater projects in areas with world class reservoirs have gained competitiveness against other oil and gas investment options,” the company said.

However it also added: “Whilst final investment decisions are on the increase, clients remain cautious and selective. As a result, the offshore services industry is gradually recovering but with a structurally lower activity level when compared to the market over the past decade.”

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