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Aker Solutions order book grows but price squeeze continues

Norwegian oil services company Aker Solutions has seen huge interest from oil companies in the third quarter, with rising activity across all primary markets. Revenue is growing but the company continues to be squeezed by prices.

Photo: Hjalmar Otto Fjøsne/Aker Solutions

Since the oil price collapse, activity in the oil sector has been low. The oil companies have held back with investments and oil service companies have not had much to do.

However, Norway's Aker Solutions believes this trend is about to turn around.

"Our order intake in the quarter more than doubled versus the same period a year earlier, and we're seeing high tendering activity in all our markets," said Aker Solutions CEO Luis Araujo in the company's latest quarterly report published Wednesday.

The report shows that Aker Solutions books orders valued at NOK 5.9 billion (USD 710 million) in the third quarter, bringing the order book up to NOK 36.1 billion.

The Norwegian oil service company's tasks have a total value of NOK 45 billion and two thirds of these are subsea tasks with the company expecting to land a number of key projects in Brazil, UK, Africa, Australia and the Asia Pacific. Most recently, Aker Solutions won a contract last Thursday for a subsea production system and umbilicals for a Chinese gas field.

Aker Solutions' revenue increased from NOK 5.4 billion in Q3 last year to NOK 6.5 billion this year while operating result (EBITDA) lands at NOK 463 million in the quarter against NOK 401 million in the same quarter the year prior.

However, the Norwegian oil service companies' EBITDA margin has declined slightly to 7.1 percent from 7.4 percent in the third quarter of last year.

While Aker solutions sees "increasing signs of a recovery amid lower break-even costs and higher oil prices," the company also says "the outlook for oil services remains competitive and there is pressure on pricing."

 

English Edit: Lena Rutkowski

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