Oil & gas ‘supercycle’ pushes Saipem’s offshore activity up, bringing record-quarterly revenue

Italian oilfield services provider Saipem has posted the highest quarterly revenue since the fourth quarter of 2015, driven by sizeable awards for its offshore business segment backed by an oil and gas “supercycle” and backlog execution in line with the firm’s business plan targets.

Saipem disclosed its results for the third quarter and the first nine months of 2022 on Thursday, explaining that its performance continued to improve with revenues and margins growing at “double-digit rates” compared to the nine months of 2021 and the second quarter of 2022.

As a result, the Italian giant revised its full-year 2022 guidance upwards, expecting revenues of over €9 billion or $8.9 billion; adjusted EBITDA of over €550 million (around $546 million); and post-IFRS-16 net debt of around €300 million (about $298 million) at year-end, including proceeds from the sale of its onshore drilling business.

The oilfield services provider recorded revenues of €3 billion (almost $3 billion) in 3Q 2022, which is up by 21 per cent compared to the second quarter while its adjusted EBITDA is €215 million (approximately $214 million) in the third quarter of 2022, up by 22 per cent compared to 2Q 2022.

Saipem posted revenues of €7.4 billion in the first nine months of 2022. This is 47 per cent higher compared to the first nine months of 2021. The company’s adjusted EBITDA for the first nine months of 2022 is €536 million ($533 million), compared to a loss of €291 million or $289 million in the first nine months of 2021. According to the company, the improvement is recorded in “all the activities, mainly driven by Offshore Engineering & Construction and drilling sectors.”

The Italian player’s pre-IFRS-16 net debt was €88 million ($87 million) at the end of September, which is €426 million ($423 million) including IFRS-16 effects – compared to €1.2 billion as of 31 December 2021 – “confirming the progressive deleveraging path undertaken.” Saipem’s order intake year-to-date on 30 September totalled €8.6 billion (over $8.5 billion), with approximately €4.6 billion of orders acquired in October, giving a total of more than €13 billion or $12.9 billion. The company says that around 70 per cent of awards are in offshore businesses.

Furthermore, Saipem’s net result, including the net result from discontinued operations (onshore business) of €19 million ($18.9 million), recorded a loss of €138 million (over $137 million) in the first nine months of 2022, compared to a loss of €1.1 billion in the first nine months of 2021. The Italian firm’s capital expenditure is €211 million (about $210 million) in the first nine months of 2022, compared to €195 million or $194 million in the first nine months of 2021.

Saipem was awarded new contracts amounting to €6.9 billion in the first nine months of 2022, compared to €4.6 billion in the first nine months of 2021. The oilfield services provider’s backlog, as of 30 September 2022, amounted to €20.9 billion ($20.8 billion) – €7.3 billion in Offshore Engineering & Construction, €12.9 billion ($12.8 billion) in Onshore Engineering & Construction, and €797 million or $792 million in Offshore Drilling – of which €2.1 billion is to be executed in 2022.

The firm explained that the non-consolidated backlog was reduced by €800 million or $795 million during the third quarter, as a result of the cancellation of the activities falling within the sanctioning framework of the European Union against the Russian Federation due to the Ukraine crisis.

Regarding the Offshore Engineering & Construction segment, Saipem outlined that the revenue increased by 85 per cent on a year-on-year basis during the first nine months of 2022 with “strong acceleration” in the 3Q 2022 with “substantially no vessel idleness and higher volumes across all regions,” driven by the Middle East. The Italian giant highlights that oil and gas projects‘ progress more than offset offshore wind, driving the adjusted EBITDA up.

When it comes to the offshore drilling segment, the firm underlined that the revenue in the first nine months of 2022 was boosted by zero idleness and the start of operations of the new drillship, Santorini. This revenue is 52 per cent higher than during the first nine months of 2021. In line with this, the adjusted EBITDA for this segment reflects revenue increase and higher fleet utilisation.

Saipem further underscores that its performance improvement is driven by “business recovery and increasing rates.” The firm’s offshore drilling fleet is 74 per cent booked in 2023.

The Italian player has secured multiple contracts for its vessels over the past few months. Two deals in Ivory Coast, worth approximately €1 billion (around $956 million), were secured in late September.

The contracts were assigned by the Eni Cote d’Ivoire-Petroci consortium for the development of the relative oil and gas field offshore Ivory Coast located at a 1,200m water depth.