(Recasts lead, adds management comments)
MILAN Feb 23 Italian oil services group Saipem
does not see any recovery for the industry this year
in spite of higher crude prices, with oil companies continuing
to delay projects.
Saipem, jointly controlled by Italian major Eni and
state-lender fund FSI, reported a net loss of 2.1 billion euros
in 2016 on Thursday due to heavy writedowns booked to deal with
a prolonged slump triggered by lower oil prices and increased
Since OPEC reached an agreement in November to cut
production levels, crude prices have risen slightly but Saipem
said oil majors remained cautious.
"Our clients are still delaying projects, especially in deep
water," Saipem CEO Stefano Cao said on a call with analysts.
"The low level of investments will persist in 2017, with the
exception of North America and in part in the Middle East," Cao
The company confirmed targets for the year set back in
October, including adjusted core earnings of around 1 billion
euros, but noted they were underpinned by work already in the
Asked if the group could repeat its 2016 order intake this
year Cao said: "We will do what we can to achieve that."
Oil service companies around the world are finding business
tough as weak crude prices force oil majors to cut billions of
dollars in costs.
In the fourth quarter, the contractor made an adjusted net
profit of 26 million euros, whereas a Thomson Reuters consensus
had forecast 57 million euros.
Saipem, which employs 38,000 people, is a market leader in
subsea engineering and construction (E&C) work including the
world's most expensive oil field, Kazakhstan's Kashagan.
But its onshore E&C and drilling businesses remain a problem
and some analysts have said it could sell assets.
"We are not studying any disposals of our units," CFO and
strategy officer Giulio Bozzini told a media call.
Bozzini said Saipem was asking for compensation of 600-700
million euros from Gazprom for cancellation of a South
Stream contract in 2015.
He said he expected a decision to be made in 2018.
(Reporting by Stephen Jewkes; Editing by Elaine Hardcastle and