Singapore-based rig builder Sembcorp Marine (Sembmarine) has reported a loss of S$30 million (US$21.75 million) in the third quarter of the year amid lower revenues and reduced activity.
For the nine months to September 30, 2018 the loss is $80.1 million, compared to restated earnings of $142.9 million in the same period previous year.
According to a stock exchange annoucement from the Asian company based in Singapore, the net loss for both 3Q and 9M periods were mainly due to loss upon the sale of a semi-submersible and continued low overall business volume.
However the group revenue for the nine months was S$3.97 billion, including sale completion of West Rigel rig for US$500 million.
"The higher revenue in 9M 2018 was largely due to revenue recognition on delivery of 6 jack-up rigs to Borr Drilling, 1 jack-up rig to BOTL, the sale of the West Rigel semi-submersible rig (renamed Transocean Norge) and higher percentage recognition for ongoing drillship and offshore production projects in 9M 2018," Sembmarine said the statement.
Capex spend on global exploration and production (E&P) is expected to continue to improve with firmer oil prices seen in the nine months of 2018, it said. While offshore drilling activities have shown initial signs of improvement, offshore rig orders will take some time to recover as the market remains over-supplied.
The majority of recent new offshore oil and gas orders were for production projects. This trend is expected to continue and Sembcorp Marine is responding to an encouraging pipeline of enquiries and tenders for innovative engineering solutions.
Competition in the repairs and upgrades segment remains intense. The segment will be underpinned by regulations that require ballast water treatment systems and gas scrubbers to be installed over the next two to five years.
According to the company release: "Challenges in the offshore and marine sector persist, notwithstanding the improved industry outlook. It will take some time before we see a sustained recovery in new orders, while competition remains intense and margins compressed."
"Overall business volume and activity for the Group is expected to remain relatively low for the immediate quarters. The trend of negative operating profit is expected to continue for the foreseeable quarter. Our cash resources remain sufficient and we will continue to prudently manage our costs and cash flows to align them with business volume and potential opportunities," said the company statement.