Oslo-listed Subsea 7 is considering a potential downsize of its fleet as it looks to cut down costs amid offshore oil & gas Exploration & Production slowdown.
The seabed-to-surface engineering contractor revealed it had recognised a prospect to reduce its fleet by 10 vessels, over a two year period, through release of charter vessels and disposal of owned vessels.
The company, which axed 1000 jobs in 2014, in order to tackle the situation on the market, had 39 active vessels at the end of 2014, with utilisation of 82%, out of which 13 are chartered vessels with renewal dates starting from end 2015.
We took steps in early 2014 to prepare the Group for the downturn, implementing cost reduction programmes and other efficiency improvements. This focus will continue in 2015 as we further reduce the size of our cost base to align the business more closely with market conditions, the company said in its annual results presentation.
According to Jean Cahuzac, Chief Executive Officer, the possible fleet reduction can be achieved by releasing some of the vessels that are nearing their lease renewal dates and retiring some of the old vessel that are ageing and can be replaced by vessel from the company’s fleet renewal program.
In the year 2014, Subsea 7 spent approximately $544 million on its new-build vessel program and it expects to spend additional $700 million in 2015.
Vessels under construction are Seven Arctic, a heavy construction vessel, due for delivery in 2016; three PLSVs, Seven Rio, Seven Sun and Seven Cruzeiro, linked to long-term contracts awarded by Petrobras, with delivery expected in late 2015 and during 2016, and DSV Seven Kestrel with delivery expected in 2015.