Market Update: Saipem Achieves Record Profits in 2011 [REPORT]

Saipem, the offshore energy contracting arm of Italian integrated energy company ENI, reported record profits in 2011.  Their adjusted net profit for 2011 reached a record level of €921 million, which was an 11.2% increase compared to 2010.  New contracts and backlog maintained a fairly steady pace near 2010 levels.

Saipem’s Management Outlook for 2012 

Oil industry spending is expected to increase in 2012, even though the widespread uncertainty of the global economy might affect the timing in the award of scheduled projects.  The market is expected to be buoyant in the following offshore areas:

West Africa, Nigeria and Angola in particular; Azerbaijan, Brazil, South East Asia and Australia

Furthermore, important projects related to gas field development and transport may be sanctioned during the year:  the first phase of the Shtokman project in the Barents Sea, the Brass liquefaction plant in Nigeria, and the Algeria-Italy Galsi pipeline project. Market prospects for the oil services industry are therefore expected to improve in 2012.

As far as Saipem is concerned, the distinctive diversity of the fleet, significant local presence and positive track record underpin expectations that Saipem shall be able to take full advantage, in terms of new contract acquisitions, of the expected forthcoming market improvement.

With respect to financial targets:  the offshore drilling sector shall benefit from the start of operations of Scarabeo 9 (January 19) offshore Cuba, and of Scarabeo 8 (April) in the Barent’s Sea for ENI Norge.  These targets will be partially offset by upgrading works to be carried out on Scarabeo 6, which should require approximately 6.5 months.

In  2012 a modest increase in volumes is also expected in both the Offshore and Onshore Engineering & Construction sectors, with margins similar to those of 2011.

In 2012 Saipem expects to achieve revenues of €13 billion, EBIT of approximately 1.6 billion and net income of approximately €1 billion.

Investments for 2012 relate mainly to maintenance activities, the completion of the pipelayer Castorone, the previously mentioned upgrading works on Scarabeo 6 to enable it to operate in water depths of up to 1,100 metres, and the first phase of development for a new construction yard in Brazil; overall capital expenditure is forecast at approximately â‚¬900 million.

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